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TV Advertising, Programming Investments, and Product-Market Oligopoly

Author

Listed:
  • Nilssen, T.
  • Sorgard, L.

Abstract

We present a model of the TV-advertising market that encompasses both the product markets and the market for TV programs. We argue that the TV industry has several idiosyncratic characteristics that need to be modeled, and show that the strategic interaction in this industry differs from other industries in many respects. We find that a move from a TV monopoly to a TV duopoly may reduce both the total number of viewers and the total amount of TV advertising. A softening of price competition in each product market results in more investment in programming, higher price per advertising slot, and more advertising. A reduction of the number of firms in each product market may have the opposite effect if the price competition in the product market is sufficiently soft initially. Finally, we find that even small asymmetries between product markets can cause large asymmetries with respect to which producers buy advertising on TV.

Suggested Citation

  • Nilssen, T. & Sorgard, L., 2000. "TV Advertising, Programming Investments, and Product-Market Oligopoly," Papers 6/2000, Norwegian School of Economics and Business Administration-.
    • Handle: RePEc:fth:norgee:6/2000
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    Citations

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    Cited by:

    1. Kind, Hans Jarle & Nilssen, Tore & Sørgard, Lars, 2005. "Advertising on TV: Under- or Overprovision?," Memorandum 15/2005, Oslo University, Department of Economics.
    2. Nilssen,T. & Sorgard,L., 2000. "Strategic informative advertising in a TV-advertising duopoly," Memorandum 17/2000, Oslo University, Department of Economics.
    3. Hans Jarle Kind & Tore Nilssen & Lars Sørgard, 2007. "Competition for Viewers and Advertisers in a TV Oligopoly," Journal of Media Economics, Taylor & Francis Journals, vol. 20(3), pages 211-233.
    4. Christian Jansen, 2003. "Convergence and the Potential Ban on Interactive Product Placement in Germany," Law and Economics 0302002, University Library of Munich, Germany.
    5. Ivaldi, Marc & Zhang, Jiekai, 2015. "Advertising competition in the French free-to-air television broadcasting industry," TSE Working Papers 15-578, Toulouse School of Economics (TSE), revised Apr 2018.
    6. Marc Ivaldi & Jiekai Zhang, 2017. "Advertising Competition in the Free-to-Air TV Broadcasting Industry," CESifo Working Paper Series 6461, CESifo.
    7. Nilssen,T. & Sorgard,L., 2001. "The TV industry : advertising and programming," Memorandum 18/2001, Oslo University, Department of Economics.
    8. Marc Ivaldi & Jiekai Zhang, 2022. "Platform mergers: lessons from a case in the digital TV market," Post-Print hal-03881366, HAL.

    More about this item

    Keywords

    ADVERTISING ; INVESTMENTS ; OLIGOPOLIES;
    All these keywords.

    JEL classification:

    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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