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Advertising, competition and entry in media industries

Author

Listed:
  • Claude Crampes

  • Carole Haritchabalet

    (CATT - Centre d'Analyse Théorique et de Traitement des données économiques - UPPA - Université de Pau et des Pays de l'Adour)

  • Bruno Jullien

Abstract

This paper presents a model of media competition with free entry when media operators are financed both from advertisers and customers. The relation between advertising receipts and sales receipts, which are both complementary and antagonist, is different if media operators impose a price or a quantity to advertisers. When consumers dislike advertising, media operators are better off setting an advertising price than an advertising quantity. We establish a relationship between the equilibrium levels (advertising and entry) and the advertising technology. In particular, media operators’ profit is not affected by the introduction of advertising when they impose advertising quantities and when advertising exhibits constant returns to scale in the audience size. Under constant or increasing returns to scale in the audience size, we find an excessive level of entry and an insufficient level of advertising.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Claude Crampes & Carole Haritchabalet & Bruno Jullien, 2009. "Advertising, competition and entry in media industries," Post-Print hal-04119567, HAL.
    • Handle: RePEc:hal:journl:hal-04119567
    DOI: 10.1111/j.1467-6451.2009.00368.x
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    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media

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