Advertising on TV: Under- or Overprovision?
We consider a model where TV channels transmit advertising, and viewers dislike such commercials. We find that the less differentiated the TV channels’ programs are, the lower is the amount of advertising in equilibrium. Relative to the social optimum, there is underprovision of advertising if TV channels are sufficiently close substitutes. In such a situation, a merger between TV channels may lead to more advertising and thus improve welfare. A publicly owned TV channel can partly correct market distortions, in some cases by having a larger amount of advertising than a private TV channel. It may actually have advertising even in cases where it is wasteful per se
|Date of creation:||22 May 2005|
|Date of revision:|
|Publication status:||Published in Journal of Media Economics, 2007, pages 211-233.|
|Contact details of provider:|| Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway|
Phone: 22 85 51 27
Fax: 22 85 50 35
Web page: http://www.oekonomi.uio.no/indexe.html
More information through EDIRC
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.:
- Xavier Vives, 2001. "Oligopoly Pricing: Old Ideas and New Tools," MIT Press Books, The MIT Press, edition 1, volume 1, number 026272040x.
- Anthony Dukes, 2004. "The Adverstising Market in a Product Oligopoly," Journal of Industrial Economics, Wiley Blackwell, vol. 52(3), pages 327-348, 09.
- GABSZEWICZ, Jean J. & LAUSSEL, Didier & SONNAC, Nathalie, .
"Programming and advertising competition in the broadcasting industry,"
CORE Discussion Papers RP
1873, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Jean J. Gabszewicz & Didier Laussel & Nathalie Sonnac, 2004. "Programming and Advertising Competition in the Broadcasting Industry," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 13(4), pages 657-669, December.
- Mark Armstrong, 2005.
"Competition in Two-Sided Markets,"
- Bagwell, Kyle, 2007. "The Economic Analysis of Advertising," Handbook of Industrial Organization, Elsevier.
- Tore Nilssen, 2011.
"Risk externalities in a payments oligopoly,"
Portuguese Economic Journal,
Springer;Instituto Superior de Economia e Gestao, vol. 10(3), pages 211-234, December.
- Barros Pedro P & Kind Hans Jarle & Nilssen Tore & Sørgard Lars, 2005. "Media Competition on the Internet," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 4(1), pages 1-20, January.
- CREMER, Helmuth & MARCHAND, Maurice & THISSE, Jacques-François, .
"Mixed oligopoly with differentiated products,"
CORE Discussion Papers RP
930, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Simon P. Anderson, 2005. "Regulation of Television advertising," Virginia Economics Online Papers 363, University of Virginia, Department of Economics.
- de Fraja, Giovanni & Delbono, Flavio, 1989. "Alternative Strategies of a Public Enterprise in Oligopoly," Oxford Economic Papers, Oxford University Press, vol. 41(2), pages 302-11, April.
- Nilssen, T. & Sorgard, L., 1998.
"A Public Firm Challenged by Entry: Duplication of Diversity?,"
13/98, Norwegian School of Economics and Business Administration-.
- Nilssen, Tore & Sorgard, Lars, 2002. "A public firm challenged by entry: duplication or diversity?," Regional Science and Urban Economics, Elsevier, vol. 32(2), pages 259-274, March.
- Esther Gal-Or & Anthony Dukes, 2003. "Minimum Differentiation in Commercial Media Markets," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 12(3), pages 291-325, 09.
- Gary S. Becker & Kevin M. Murphy, 1993. "A Simple Theory of Advertising as a Good or Bad," The Quarterly Journal of Economics, Oxford University Press, vol. 108(4), pages 941-964.
- Simon P. Anderson & Stephen Coate, 2000. "Market Provision of Public Goods: The Case of Broadcasting," NBER Working Papers 7513, National Bureau of Economic Research, Inc.
- Kind, Hans Jarle & Nilssen, Tore & Sørgard, Lars, 2005.
"Financing of Media Firms: Does Competition Matter?,"
01/2005, Oslo University, Department of Economics.
- Hans Jarle Kind & Tore Nilssen & Lars Sørgard, 2005. "Financing of Media Firms: Does Competition Matter?," CIE Discussion Papers 2005-08, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
- Michael A. Salinger, 1988. "Vertical Mergers and Market Foreclosure," The Quarterly Journal of Economics, Oxford University Press, vol. 103(2), pages 345-356.
- Nilssen, T. & Sorgard, L., 2000. "TV Advertising, Programming Investments, and Product-Market Oligopoly," Papers 6/2000, Norwegian School of Economics and Business Administration-.
- Buchanan, James M, 1969. "External Diseconomies, Corrective Taxes, and Market Structure," American Economic Review, American Economic Association, vol. 59(1), pages 174-77, March.
- Massimo Motta & Michele Polo, 1997. "Concentration and public policies in the broadcasting industry: the future of television," Economic Policy, CEPR;CES;MSH, vol. 12(25), pages 293-334, October.
When requesting a correction, please mention this item's handle: RePEc:hhs:osloec:2005_015. 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: (Magnus Gabriel Aase)The email address of this maintainer does not seem to be valid anymore. Please ask Magnus Gabriel Aase to update the entry or send us the correct email address
If references are entirely missing, you can add them using this form.