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Spatial Competition in the Network Television Industry

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  • Goettler, Ronald L
  • Shachar, Ron

Abstract

We present an empirical study of spatial competition and a methodology to estimate demand for products with unobservable characteristics. Using panel data, we estimate a discrete-choice model with latent-product attributes and unobserved heterogeneous consumer preferences. Our application of the methodology to the network television industry yields estimates that are consistent with experts' views. Given our estimates, we compute Nash equilibria of a product location game and find that firms' observed strategies (such as the degree of product differentiation) are generally optimal. Discrepancies between actual and optimal strategies reflect the networks' adherence to "rules of thumb" and, possible, bounded rationality behavior. Copyright 2001 by the RAND Corporation.

Suggested Citation

  • Goettler, Ronald L & Shachar, Ron, 2001. "Spatial Competition in the Network Television Industry," RAND Journal of Economics, The RAND Corporation, vol. 32(4), pages 624-656, Winter.
  • Handle: RePEc:rje:randje:v:32:y:2001:i:4:p:624-56
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    Cited by:

    1. Sha Yang & Vishal Narayan & Henry Assael, 2006. "Estimating the Interdependence of Television Program Viewership Between Spouses: A Bayesian Simultaneous Equation Model," Marketing Science, INFORMS, vol. 25(4), pages 336-349, July.
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    3. Jiang, Renna & Manchanda, Puneet & Rossi, Peter E., 2009. "Bayesian analysis of random coefficient logit models using aggregate data," Journal of Econometrics, Elsevier, vol. 149(2), pages 136-148, April.
    4. Anderson, Simon P. & Gabszewicz, Jean J., 2006. "The Media and Advertising: A Tale of Two-Sided Markets," Handbook of the Economics of Art and Culture, Elsevier.
    5. Stoneman, Paul, 2011. "Soft Innovation: Economics, Product Aesthetics, and the Creative Industries," OUP Catalogue, Oxford University Press, number 9780199697021.
    6. Sendhil Mullainathan & Andrei Shleifer, 2005. "The Market for News," American Economic Review, American Economic Association, vol. 95(4), pages 1031-1053, September.
    7. Lindsey, Robin & West, Douglas S., 2003. "Predatory pricing in differentiated products retail markets," International Journal of Industrial Organization, Elsevier, vol. 21(4), pages 551-592, April.
    8. Susan Athey & Guido W. Imbens, 2007. "Discrete Choice Models With Multiple Unobserved Choice Characteristics," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 48(4), pages 1159-1192, November.
    9. Liran Einav, 2010. "Not All Rivals Look Alike: Estimating An Equilibrium Model Of The Release Date Timing Game," Economic Inquiry, Western Economic Association International, vol. 48(2), pages 369-390, April.
    10. repec:bla:presci:v:95:y:2016:i:4:p:877-894 is not listed on IDEAS
    11. Brian Knight & Ana Tribin, 2016. "The Limits of Propaganda: Evidence from Chavez's Venezuela," NBER Working Papers 22055, National Bureau of Economic Research, Inc.
    12. Yong Liu & Daniel S. Putler & Charles B. Weinberg, 2006. "A Reply to “A Comment on ‘Is Having More Channels Really Better? A Model of Competition Among Commercial Television Broadcasters' ”," Marketing Science, INFORMS, vol. 25(5), pages 543-546, September.
    13. Liran Einav (Stanford University), 2004. "Not All Rivals Look Alike: An Empirical Model for Discrete Games with Asymmetric Rivals," Econometric Society 2004 North American Winter Meetings 626, Econometric Society.
    14. Kenneth C. Wilbur, 2008. "A Two-Sided, Empirical Model of Television Advertising and Viewing Markets," Marketing Science, INFORMS, vol. 27(3), pages 356-378, 05-06.
    15. 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.
    16. Yong Liu & Daniel Putler & Charles Weinberg, 2006. "The welfare and equity implications of competition in television broadcasting: the role of viewer tastes," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 30(2), pages 127-140, September.
    17. Steven Berry, 2003. "Comment," Quantitative Marketing and Economics (QME), Springer, vol. 1(3), pages 285-291, September.
    18. Nickolay V. Moshkin & Ron Shachar, 2002. "The Asymmetric Information Model of State Dependence," Marketing Science, INFORMS, pages 435-454.
    19. Massimiliano Landi, 2012. "Single Peakedness and Giffen Demand," Working Papers 02-2012, Singapore Management University, School of Economics.
    20. Nilssen,T. & Sorgard,L., 2001. "The TV industry : advertising and programming," Memorandum 18/2001, Oslo University, Department of Economics.
    21. Bajari, Patrick & Benkard, C. Lanier, 2004. "Demand Estimation With Heterogeneous Consumers and Unobserved Product Characteristics: A Hedonic Approach," Research Papers 1842, Stanford University, Graduate School of Business.
    22. C. Lanier Benkard & Patrick Bajari, 2004. "Demand Estimation with Heterogeneous Consumers and Unobserved Product Characteristics: A Hedonic Approach," NBER Working Papers 10278, National Bureau of Economic Research, Inc.
    23. 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.
    24. Yong Liu & Daniel S. Putler & Charles B. Weinberg, 2004. "Is Having More Channels Really Better? A Model of Competition Among Commercial Television Broadcasters," Marketing Science, INFORMS, vol. 23(1), pages 120-133, July.

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