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Network Competition and the Timing of Commercials

Author

Listed:
  • Gil S. Epstein

    (Department of Economics, Bar-Ilan University, Ramat Gan 52900, Israel)

Abstract

In a market with a small number of networks, the timing of the commercial breaks is a very important factor in determining the number of viewers facing a channel. Using a theoretical model and statistical analysis with empirical data from the four networks in the United States, we analyze the equilibrium achieved in this network monopolistic competition. Among other things, it is shown theoretically and empirically that in equilibrium all networks broadcast commercial breaks at the same time. As the ability to coordinate is not always possible, it is shown that, as the program progresses, the level of coordination decreases.

Suggested Citation

  • Gil S. Epstein, 1998. "Network Competition and the Timing of Commercials," Management Science, INFORMS, vol. 44(3), pages 370-387, March.
  • Handle: RePEc:inm:ormnsc:v:44:y:1998:i:3:p:370-387
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    File URL: http://dx.doi.org/10.1287/mnsc.44.3.370
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    References listed on IDEAS

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    1. Heien, Dale & Durham, Cathy, 1991. "A Test of the Habit Formation Hypothesis Using Household Data," The Review of Economics and Statistics, MIT Press, vol. 73(2), pages 189-199, May.
    2. J. Miguel Villas-Boas, 1993. "Predicting Advertising Pulsing Policies in an Oligopoly: A Model and Empirical Test," Marketing Science, INFORMS, vol. 12(1), pages 88-102.
    3. Klemperer, Paul D, 1987. "Entry Deterrence in Markets with Consumer Switching Costs," Economic Journal, Royal Economic Society, vol. 97(388a), pages 99-117, Supplemen.
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    Citations

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    Cited by:

    1. Tomas Kadlec, 2002. "Optimal Timing of TV Commercials: Symmetrical Model," CERGE-EI Working Papers wp195, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    2. Andrew Sweeting, 2009. "The strategic timing incentives of commercial radio stations: An empirical analysis using multiple equilibria," RAND Journal of Economics, RAND Corporation, vol. 40(4), pages 710-742.
    3. Kevin M. Murphy & Ignacio Palacios-Huerta, 2016. "A Theory of Bundling Advertisements in Media Markets," NBER Working Papers 22994, National Bureau of Economic Research, Inc.
    4. Andrew Sweeting, 2005. "Coordination Games, Multiple Equilibria and the Timing of Radio Commercials," 2005 Meeting Papers 490, Society for Economic Dynamics.

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