Spilling Over and Crowding Out: The Effects of Public Sector/Private Sector Convergence and Competition, in the Provision of Public Goods
This paper develops an original model of product differentiation, to contribute to the debate about theregulation and finance of public television. It goes beyond the conventional analysis in this topic, byshowing the spill-over effects that a public broadcaster can have upon commercial broadcasters. It showshow the existence of a publicly-financed, free-to-air channel (such as the BBC) can affect the behaviour ofadvertiser-financed, free-to-air channels (such as the ITV). In particular, it shows what happens if theoutput of the public channel converges with that offered by private firms, so that it becomes lessdistinctive; and or it introduces advertising.These are timely issues, given the extent to which public broadcasters are increasingly criticised forseeking popularity, losing distinctiveness, and in many cases, introducing advertising. These tensions arebeing felt in the television sectors of virtually every country of the world. To illustrate these and otherquestions of this nature, we develop a model that clarifies the interplay of the key issues. Moreover, themodel has wider parallels to other sectors where services are also offered free at the point of access, butfinanced by advertising. The most obvious example is the internet.The following pages therefore develop an original model of product differentiation in two dimensions,following the tradition of Hotelling and Cournot competition. The horizontal product attribute is programmequality or type, and the vertical attribute is level of advertising. Broadcasters compete for viewers byaltering their levels of advertising. The second novelty of this model is its pricing scheme, which capturesthe unusual nature of television advertising markets. Channels sell quantities of airtime to advertisers, theunit price of which is determined by the number of viewers. Relative demand therefore plays the role ofprice in a Cournot model, except there can be different prices for diff
|Date of creation:||2001|
|Contact details of provider:|| Postal: Poschingerstrasse 5, 81679 Munich|
Phone: +49 (89) 9224-0
Fax: +49 (89) 985369
Web page: http://www.cesifo-group.de
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Tore Nilssen & Lars Sørgard, 1998. "Time Schedule and Program Profile: TV News in Norway and Denmark," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 7(2), pages 209-235, 06.
- Nilssen, Tore, 1997.
"Sequential location when transportation costs are asymmetric,"
Elsevier, vol. 54(2), pages 191-201, February.
- Nilssen, T., 1996. "Sequential Location when Transportation Costs Are Asymmetric," Memorandum 36/1996, Oslo University, Department of Economics.
- Bergstrom, Theodore C & Goodman, Robert P, 1973. "Private Demands for Public Goods," American Economic Review, American Economic Association, vol. 63(3), pages 280-296, June.
- Nilssen, T & Sorgard, L, 1996. "Time Schedule and Programme Progile : TV News in Norway and Denmark," Papers 14/96, Norwegian School of Economics and Business Administration-. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:ces:ceswps:_569. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Klaus Wohlrabe)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.