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Financing of Media Firms: Does Competition Matter?

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Author Info

  • Kind, Hans Jarle

    ()
    (Norwegian School of Economics and Business Administration)

  • Nilssen, Tore

    ()
    (Dept. of Economics, University of Oslo)

  • Sørgard, Lars

    ()
    (Norwegian Competition Authority)

Abstract

This paper analyses how competition between media firms influences the way they are financed. In a setting where monopoly media firms choose to be completely financed by consumer payments, competition may lead the media firms to be financed by advertising as well. The closer substitutes the media firms’ products are, the less they rely on consumer payment and the more they rely on advertising revenues. If media firms can invest in programming, they invest more the less differentiated the media products are perceived to be.

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Bibliographic Info

Paper provided by Oslo University, Department of Economics in its series Memorandum with number 01/2005.

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Length: 22 pages
Date of creation: 06 Apr 2005
Date of revision:
Publication status: Published in Marketing Science, 2009, pages 1112-1128.
Handle: RePEc:hhs:osloec:2005_001

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Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway
Phone: 22 85 51 27
Fax: 22 85 50 35
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Web page: http://www.oekonomi.uio.no/indexe.html
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Keywords: Media; Advertising; Two-sided markets;

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References

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  1. Mark Armstrong, 2006. "Competition in two‐sided markets," RAND Journal of Economics, RAND Corporation, vol. 37(3), pages 668-691, 09.
  2. Peitz, Martin & Valletti, Tommaso M., 2008. "Content and advertising in the media: Pay-tv versus free-to-air," International Journal of Industrial Organization, Elsevier, vol. 26(4), pages 949-965, July.
  3. Kind, Hans Jarle & Nilssen, Tore & Sørgard, Lars, 2005. "Advertising on TV: Under- or Overprovision?," Memorandum 15/2005, Oslo University, Department of Economics.
  4. Bulow, Jeremy I & Geanakoplos, John D & Klemperer, Paul D, 1985. "Multimarket Oligopoly: Strategic Substitutes and Complements," Journal of Political Economy, University of Chicago Press, vol. 93(3), pages 488-511, June.
  5. Jean J. Gabszewicz & Didier Laussel & Nathalie Sonnac, 2004. "Programming and Advertising Competition in the Broadcasting Industry," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 13(4), pages 657-669, December.
  6. GABSZEWICZ, Jean J. & LAUSSEL, Didier & SONNAC, Nathalie, . "Does advertising lower the price of newspapers to consumers? A theoretical appraisal," CORE Discussion Papers RP -1760, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  7. Xavier Vives, 2001. "Oligopoly Pricing: Old Ideas and New Tools," MIT Press Books, The MIT Press, edition 1, volume 1, number 026272040x, December.
  8. repec:rje:randje:v:37:y:2006:3:p:668-691 is not listed on IDEAS
  9. Spence, A Michael & Owen, Bruce, 1977. "Television Programming, Monopolistic Competition, and Welfare," The Quarterly Journal of Economics, MIT Press, vol. 91(1), pages 103-26, February.
  10. GABSZEWICZ, Jean & WAUTHY, Xavier, 2004. "Two-sided markets and price competition with multi-homing," CORE Discussion Papers 2004030, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  11. Chae, Suchan & Flores, Daniel, 1998. "Broadcasting versus narrowcasting," Information Economics and Policy, Elsevier, vol. 10(1), pages 41-57, March.
  12. Nilssen,T. & Sorgard,L., 2001. "The TV industry : advertising and programming," Memorandum 18/2001, Oslo University, Department of Economics.
  13. GABSZEWICZ, Jean & LAUSSEL, Didier & SONNAC, Nathalie, 2002. "Attitudes toward advertising and price competition in the press industry," CORE Discussion Papers 2002026, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  14. Barros Pedro P & Kind Hans Jarle & Nilssen Tore & Sørgard Lars, 2005. "Media Competition on the Internet," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 4(1), pages 1-20, January.
  15. Simon P. Anderson, 2005. "Regulation of Television advertising," Virginia Economics Online Papers 363, University of Virginia, Department of Economics.
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Citations

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Cited by:
  1. Hansen, Bodil O. & Keiding, Hans, 2006. "Public and Private Activity in Commercial TV Broadcasting," Working Papers 02-2006, Copenhagen Business School, Department of Economics.
  2. Kind, Hans Jarle & Nilssen, Tore & Sørgard, Lars, 2005. "Advertising on TV: Under- or Overprovision?," Memorandum 15/2005, Oslo University, Department of Economics.
  3. Lynne Pepall & Dan Richards & Liang Tan, 2006. "Advertising: "The Good, the Bad and the Ugly"," Discussion Papers Series, Department of Economics, Tufts University 0606, Department of Economics, Tufts University.
  4. Hans Jarle Kind & Tore Nilssen & Lars Sørgard, 2009. "Business Models for Media Firms: Does Competition Matter for How They Raise Revenue?," Marketing Science, INFORMS, vol. 28(6), pages 1112-1128, 11-12.

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