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Competition for Viewers and Advertisers in a TV Oligopoly

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  • Hans Jarle Kind
  • Tore Nilssen
  • Lars Sørgard

Abstract

We consider a model of a TV oligopoly where TV channels transmit advertising and viewers dislike such commercials. We show that advertisers make a lower profit the larger the number of TV channels. If TV channels are sufficiently close substitutes, there will be underprovision of advertising relative to social optimum. We also find that the more viewers dislike ads, the more likely it is that welfare is increasing in the number of advertising financed TV channels. A publicly owned TV channel can partly correct market distortions, in some cases by having a larger amount of advertising than private TV channels. It may even have advertising in cases where advertising is wasteful per se.

Suggested Citation

  • Hans Jarle Kind & Tore Nilssen & Lars Sørgard, 2006. "Competition for Viewers and Advertisers in a TV Oligopoly," CESifo Working Paper Series 1862, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_1862
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    References listed on IDEAS

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    Cited by:

    1. Marco Antonielli & Lapo Filistrucchi, 2011. "Collusion and the political differentiation of newspapers," Working Papers 11-26, NET Institute, revised Nov 2011.
    2. Attila Ambrus & Emilio Calvano & Markus Reisinger, 2016. "Either or Both Competition: A "Two-Sided" Theory of Advertising with Overlapping Viewerships," American Economic Journal: Microeconomics, American Economic Association, vol. 8(3), pages 189-222, August.
    3. 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.
    4. Oliver Budzinski & Janina Satzer, 2011. "Sports Business and Multisided Markets: Towards a New Analytical Framework? (Long Version)," Working Papers 109/11, University of Southern Denmark, Department of Sociology, Environmental and Business Economics.
    5. Rothbauer, Julia & Sieg, Gernot, 2011. "Welfare effects of public service broadcasting in a free-to-air TV market," Economics Department Working Paper Series 13, Technische Universität Braunschweig, Economics Department.
    6. Kind, Hans Jarle & Nilssen, Tore & Sørgard, Lars, 2016. "Inter-firm price coordination in a two-sided market," International Journal of Industrial Organization, Elsevier, vol. 44(C), pages 101-112.
    7. Hans Jarle Kind & Lars Sørgard, 2013. "Market Segmentation in Two-Sided Markets: TV Rights for Premier League," CESifo Working Paper Series 4060, CESifo Group Munich.
    8. Oliver Budzinski & Janina Satzer, 2008. "Sports Business and the Theory of Multisided Markets," MAGKS Papers on Economics 200811, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    9. Harald Nygard Bergh & Hans Jarle Kind & Bjørn-Atle Reme & Lars Sørgard, 2012. "Competition between Content Distributors in Two-Sided Markets," CESifo Working Paper Series 3885, CESifo Group Munich.
    10. Man-Lui Lau & Bruce Wydick, 2014. "Does New Information Technology Lower Media Quality? The Paradox of Commercial Public Goods," Journal of Industry, Competition and Trade, Springer, vol. 14(2), pages 145-157, June.
    11. Hans Jarle Kind & Tore Nilssen & Lars Sørgard, 2010. "Price Coordination in Two-Sided Markets: Competition in the TV Industry," CESifo Working Paper Series 3004, CESifo Group Munich.
    12. Francisco Martínez-Sánchez & Miguel González-Maestre, 2010. "The role of program quality and publicly-owned platforms in the free to air broadcasting industry," Working Papers. Serie AD 2010-19, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    13. Kim, Sung-min, 2014. "Policy on the media platform industry: The analysis of pricing policies of internet media with two-sided market theory," 25th European Regional ITS Conference, Brussels 2014 101395, International Telecommunications Society (ITS).
    14. Tanja Greiner & Marco Sahm, 2011. "How Effective are Advertising Bans? On the Demand for Quality in Two-Sided Media Markets," CESifo Working Paper Series 3524, CESifo Group Munich.
    15. Subhasish M. Chowdhury & Stephen Martin, 2017. "Exclusivity and exclusion on platform Markets," Journal of Economics, Springer, pages 95-118.
    16. 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.
    17. Sahm, Marco & Greiner, Tanja, 2016. "How Effective Are Advertising Bans? On the Demand for Quality in Two-Sided Media Markets," Annual Conference 2016 (Augsburg): Demographic Change 145724, Verein für Socialpolitik / German Economic Association.
    18. Dietl, Helmut & Lang, Markus & Lin, Panlang, 2013. "Advertising pricing models in media markets: Lump-sum versus per-consumer charges," Information Economics and Policy, Elsevier, vol. 25(4), pages 257-271.
    19. Stühmeier Torben & Wenzel Tobias, 2012. "Regulating Advertising in the Presence of Public Service Broadcasting," Review of Network Economics, De Gruyter, pages 1-23.
    20. Subhasish M. Chowdhury & Stephen Martin, 2017. "Exclusivity and exclusion on platform Markets," Journal of Economics, Springer, pages 95-118.
    21. Hans Jarle Kind & Marko Köthenbürger & Guttorm Schjelderup, 2009. "Should Utility-Reducing Media Advertising be Taxed?," CESifo Working Paper Series 2589, CESifo Group Munich.
    22. repec:pal:jorsoc:v:68:y:2017:i:12:d:10.1057_s41274-016-0167-2 is not listed on IDEAS
    23. Reisinger, Markus, 2012. "Platform competition for advertisers and users in media markets," International Journal of Industrial Organization, Elsevier, vol. 30(2), pages 243-252.
    24. Miguel González-Maestre & Francisco Martínez-Sánchez, 2014. "The role of platform quality and publicly owned platforms in the free-to-air broadcasting industry," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 5(1), pages 105-124, March.
    25. Thöne, Miriam & Rasch, Alexander & Wenzel, Tobias, 2016. "Business models in commercial media markets: Bargaining, advertising, and mixing," Annual Conference 2016 (Augsburg): Demographic Change 145785, Verein für Socialpolitik / German Economic Association.

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    Keywords

    television industry; advertising;

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