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Spatial Competition in the Network Television Industry

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  • Ronald Goettler
  • Ron Shachar
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    Abstract

    We present an empirical study of spatial competition and a methodology to estimate demand for products with unobservable characteristics. Using panel data, we estimate a discrete choice model with latent product attributes and unobserved heterogenous consumer preferences. Our application of the methodology to the network television industry yields estimates that are consistent with experts' views. Given our estimates, we compute Nash equilibria of a product location game, and find that firms' observed strategies (such as the degree of product differentiation) are generally optimal. Discrepancies between actual and optimal strategies reflect the networks' adherence to "rules of thumb," and possibly, bounded rationality behavior.

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    Bibliographic Info

    Paper provided by Carnegie Mellon University, Tepper School of Business in its series GSIA Working Papers with number 2001-E19.

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    Handle: RePEc:cmu:gsiawp:993576035

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    Postal: Tepper School of Business, Carnegie Mellon University, 5000 Forbes Avenue, Pittsburgh, PA 15213-3890
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