How Effective are Advertising Bans? On the Demand for Quality in Two-Sided Media Markets
AbstractWe study a two-sided markets model of two competing television stations that offer content of differentiated quality to ad-averse consumers and advertising space to firms. As all consumers prefer high over low quality content, competition for viewers is vertical. By contrast, competition for advertisers is horizontal, taking into account the firms’ targeted advertising motive. We analyze the impact of both the strength of mutual externalities and advertisement regulation policies on the viewers’ equilibrium demand for high quality content. We find that, although consumers dislike advertisements, an advertising ban in the high quality medium reduces its viewer market share and thereby the equilibrium reception of high quality content.
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Bibliographic InfoPaper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3524.
Date of creation: 2011
Date of revision:
horizontal and vertical product differentiation; two-sided externalities; advertising ban;
Find related papers by JEL classification:
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
- L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
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