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Price Competition, Advertising and Media Market Concentration

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Author Info
Häckner, Jonas () (Dept. of Economics, Stockholm University)
Nyberg, Sten () (Dept. of Economics, Stockholm University)

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Abstract

In media markets, the value of advertisement exposure depends on circulation, and media consumers’ valuation is affected by advertising. This paper analyzes media market competition in a duopoly framework. There exist symmetric and asymmetric equilibria in terms of firm size. There is less scope for asymmetry when products are more differentiated or of higher intrinsic quality. Some media exhibit public good features. This increases the scope for asymmetry when consumers value advertising positively. If their valuation is negative only symmetric equilibria exist. Regulations limiting price competition increase the scope for natural monopoly. Finally, monopoly is a less likely outcome in subscription-based media markets.

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Publisher Info
Paper provided by Stockholm University, Department of Economics in its series Research Papers in Economics with number 2000:3.

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Length: 31 pages
Date of creation: 11 Jan 2000
Date of revision:
Handle: RePEc:hhs:sunrpe:2000_0003

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Postal: Department of Economics, Stockholm, S-106 91 Stockholm, Sweden
Phone: +46 8 16 20 00
Fax: +46 8 16 14 25
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Web page: http://www.ne.su.se/
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Related research
Keywords: Market Concentration; Oligopoly; Demand Externalities; Advertising; Media Markets;

Other versions of this item:

Find related papers by JEL classification:
D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
M37 - Business Administration and Business Economics; Marketing; Accounting - - Marketing and Advertising - - - Advertising

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Rosse, James N, 1970. "Estimating Cost Function Parameters without Using Cost Data: Illustrated Methodology," Econometrica, Econometric Society, vol. 38(2), pages 256-75, March. [Downloadable!] (restricted)
  2. Franklin M. Fisher & John J. McGowan, 1979. "Advertising and Welfare: Comment," Bell Journal of Economics, The RAND Corporation, vol. 10(2), pages 726-727, Autumn. [Downloadable!] (restricted)
  3. Avinash Dixit, 1979. "A Model of Duopoly Suggesting a Theory of Entry Barriers," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 20-32, Spring. [Downloadable!] (restricted)
    Other versions:
  4. Chaudhri, Vivek, 1998. "Pricing and efficiency of a circulation industry: The case of newspapers," Information Economics and Policy, Elsevier, vol. 10(1), pages 59-76, March. [Downloadable!] (restricted)
  5. Dertouzos, James N & Trautman, William B, 1990. "Economic Effects of Media Concentration: Estimates from a Model of the Newspaper Firm," Journal of Industrial Economics, Blackwell Publishing, vol. 39(1), pages 1-14, September. [Downloadable!] (restricted)
  6. Carl Shapiro, 1980. "Advertising and Welfare: Comment," Bell Journal of Economics, The RAND Corporation, vol. 11(2), pages 749-752, Autumn. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Crampes, Claude & Haritchabalet, Carole & Jullien, Bruno, 2006. "Advertising, Competition and Entry in Media Industries," IDEI Working Papers 374, Institut d'Économie Industrielle (IDEI), Toulouse. [Downloadable!]
    Other versions:
  2. Schmidtke, Richard, 2006. "Two-Sided Markets with Pecuniary and Participation Externalities," Discussion Papers in Economics 963, University of Munich, Department of Economics. [Downloadable!]
  3. Richard Schmidtke, 2006. "Two-Sided Markets with Pecuniary and Participation Externalities," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  4. Tore Nilssen & Lars Sørgard, 2003. "TV Advertising, Program Quality, and Product-Market Oligopoly," Industrial Organization 0303012, EconWPA. [Downloadable!]
    Other versions:
  5. Ulrich Kaiser, 2007. "Do Media Consumers Really Dislike Advertising? An Empirical Assessment of a Popular Assumption in Economic Theory," CIE Discussion Papers 2007-08, University of Copenhagen. Department of Economics. Centre for Industrial Economics. [Downloadable!]
  6. Susanne Kremhelmer & Hans Zenger, 2004. "Advertising and the Media," Industrial Organization 0403003, EconWPA. [Downloadable!]
  7. Richard Schmidtke, 2006. "Two-Sided Markets with Pecuniary and Participation Externalities," Discussion Papers 133, SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich. [Downloadable!]
  8. Nilssen,T. & Sorgard,L., 2001. "The TV industry : advertising and programming," Memorandum 18/2001, Oslo University, Department of Economics. [Downloadable!]
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