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Quality choice and advertising regulation in broadcasting markets

  • Francisco Martínez-Sánchez

    ()

    (Universidad de Alicante)

  • Miguel González-Maestre

    (Universitat Autònoma de Barcelona)

We consider the role of the endogenous choice of platform quality in a broadcasting duopoly market where competing media platforms choose also their level of advertising. We compare the equilibrium levels of quality, advertising and welfare under private and mixed duopoly competition. We show that the welfare comparison between the private and mixed duopoly regimes depends, crucially, on the interplay between the net direct effect of advertising on welfare and the degree of substitutability between platforms. We also consider the effects on quality and welfare of recent policies tending to eliminate advertising as a way of financing publicly-owned platforms.

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File URL: http://www.ivie.es/downloads/docs/wpasad/wpasad-2012-03.pdf
File Function: Fisrt version / Primera version, 2012
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Paper provided by Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) in its series Working Papers. Serie AD with number 2012-03.

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Length: 28 pages
Date of creation: Feb 2012
Date of revision:
Publication status: Published by Ivie
Handle: RePEc:ivi:wpasad:2012-03
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  1. Alcock, Jamie & Docwra, George, 2005. "A simulation analysis of the market effect of the Australian Broadcasting Corporation," Information Economics and Policy, Elsevier, vol. 17(4), pages 407-427, October.
  2. Stühmeier Torben & Wenzel Tobias, 2012. "Regulating Advertising in the Presence of Public Service Broadcasting," Review of Network Economics, De Gruyter, vol. 11(2), pages 1-23, June.
  3. 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.
  4. 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.
  5. Jean M. Imbs & Haroon Mumtaz & Morten O. Ravn & Hélène Rey, 2010. "One TV, One Price?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 112(4), pages 753-781, December.
  6. Beard, T Randolph, et al, 2001. "Price-Quality Tradeoffs and Welfare Effects in Cable Television Markets," Journal of Regulatory Economics, Springer, vol. 20(2), pages 107-23, September.
  7. Peitz, Martin & Valletti, Tommaso, 2004. "Content and Advertising in the Media: Pay-TV versus Free-To-Air," CEPR Discussion Papers 4771, C.E.P.R. Discussion Papers.
  8. Koji Ishibashi & Toyokazu Kaneko, 2008. "Partial privatization in mixed duopoly with price and quality competition," Journal of Economics, Springer, vol. 95(3), pages 213-231, December.
  9. Anderson, Simon P. & Gabszewicz, Jean J., 2006. "The Media and Advertising: A Tale of Two-Sided Markets," Handbook of the Economics of Art and Culture, Elsevier.
  10. Mark Armstrong, 2005. "Public service broadcasting," Fiscal Studies, Institute for Fiscal Studies, vol. 26(3), pages 281-299, September.
  11. Chenghuan Sean Chu, 2010. "The effect of satellite entry on cable television prices and product quality," RAND Journal of Economics, RAND Corporation, vol. 41(4), pages 730-764.
  12. Lin Panlang, 2011. "Market Provision of Program Quality in the Television Broadcasting Industry," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 11(1), pages 1-22, March.
  13. Matsumura, Toshihiro, 1998. "Partial privatization in mixed duopoly," Journal of Public Economics, Elsevier, vol. 70(3), pages 473-483, December.
  14. Germa Bel & Laia Domenech, 2009. "What Influences Advertising Price in Television Channels?: An Empirical Analysis on the Spanish Market," Journal of Media Economics, Taylor & Francis Journals, vol. 22(3), pages 164-183.
  15. Kenneth C. Wilbur, 2008. "A Two-Sided, Empirical Model of Television Advertising and Viewing Markets," Marketing Science, INFORMS, vol. 27(3), pages 356-378, 05-06.
  16. Lola Esteban & José Hernández, 2012. "Specialized advertising media and product market competition," Journal of Economics, Springer, vol. 106(1), pages 45-74, May.
  17. Crampes, Claude & Haritchabalet, Carole & Jullien, Bruno, 2006. "Advertising, Competition and Entry in Media Industries," IDEI Working Papers 374, Institut d'Économie Industrielle (IDEI), Toulouse.
  18. Simon P. Anderson & Stephen Coate, 2003. "Market Provision of Broadcasting: A Welfare Analysis," Virginia Economics Online Papers 358, University of Virginia, Department of Economics.
  19. Victor Ginsburgh & David Throsby, 2006. "Handbook of the Eonomics of Art and Culture," ULB Institutional Repository 2013/152412, ULB -- Universite Libre de Bruxelles.
  20. Mark Armstrong & Helen Weeds, 2005. "Public Service Broadcasting in the Digital World," Industrial Organization 0507010, EconWPA.
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