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Programming and Advertising Competition in the Broadcasting Industry


  • Jean J. Gabszewicz
  • Didier Laussel
  • Nathalie Sonnac


We analyze competition between two private television channels that derive their profits from advertising receipts. These profits are shown to be proportional to total population advertising attendance. The channels play a sequential game in which they first select their profiles (program mixes) and then their advertising ratios. We show that these ratios play the same role as prices in usual horizontal differentiation models. We prove that whenever ads' interruptions are costly for viewers the program mixes of the channels never converge but that the niche strategies are less effective and that the channel “profiles” are closer as advertising aversion becomes stronger.

Suggested Citation

  • 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.
  • Handle: RePEc:bla:jemstr:v:13:y:2004:i:4:p:657-669
    DOI: 10.1111/j.1430-9134.2004.00027.x

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