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Quality choice and advertising regulation in broadcasting markets

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  • Miguel González-Maestre
  • Francisco Martínez-Sánchez

Abstract

We consider the role of the endogenous choice of platform quality in a broadcasting duopoly market where competing media platforms also choose their levels of advertising. We compare the equilibrium levels of quality, advertising and welfare under private and mixed duopoly competition. We show that the welfare comparison between the private and mixed duopoly regimes depends crucially on the interplay between the net direct effect of advertising on welfare and the degree of substitutability between platforms. We also consider the effects on quality and welfare of recent policies that tend to eliminate advertising as a source of financing for publicly-owned platforms. Copyright Springer-Verlag Wien 2015

Suggested Citation

  • Miguel González-Maestre & Francisco Martínez-Sánchez, 2015. "Quality choice and advertising regulation in broadcasting markets," Journal of Economics, Springer, vol. 114(2), pages 107-126, March.
    • Handle: RePEc:kap:jeczfn:v:114:y:2015:i:2:p:107-126
    DOI: 10.1007/s00712-013-0383-z
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    Cited by:

    1. Changying Li & Youping Li & Jianhu Zhang, 2023. "On the regulation of public broadcasting," Journal of Economics, Springer, vol. 138(2), pages 129-146, March.
    2. Guillaume Roger, 2017. "Two-sided competition with vertical differentiation," Journal of Economics, Springer, vol. 120(3), pages 193-217, April.
    3. Taisuke Matsubae & Noriaki Matsushima, 2012. "Does Self-regulation of Advertisement Length Improve Consumer Welfare?," ISER Discussion Paper 0829, Institute of Social and Economic Research, Osaka University.
    4. Maria Rosa Battaggion & Alessandro Vaglio, 2018. "Newspapers and public grants: A matter of quality," Scottish Journal of Political Economy, Scottish Economic Society, vol. 65(1), pages 27-38, February.
    5. Yongyi Zhou & Yulin Zhang & Mark Goh, 2021. "Choice of pricing and advertising schemes for a two‐sided platform," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(7), pages 1865-1885, October.

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    More about this item

    Keywords

    Endogenous quality; Two-sided markets; Broadcasting duopoly; Publicly-owned platform; Advertising regulation; L11; L33; L82; M37;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising

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