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The impact of advertising length caps on TV: Evidence from the French broadcast TV industry

Listed author(s):
  • Jiekai ZHANG

    ()

    (INSEE-CREST, 150 Boulevard Gabriel Péri, 92245 MALAKOFF, France)

Registered author(s):

    The quantities of advertising on TV are regulated in France, as in many other developed countries. This paper aims at understanding the welfare implication of such regulation. It is the first paper which investigates this issue with a structural econometric model in two-sided market framework. I construct an unique database of per hour data on 12 main broadcast TV stations in France during one year (2014) to estimate structurally the demand and supply in the French broadcast television industry. I identify the shadow prices of regulation caps on advertising quantities, using the difference in estimated marginal costs between the binding and non-binding regulation constraints. A counterfactual experiment is carried out to quantify the exact impact of regulation. The results suggest that the TV channels advertise more without regulation but the overall impact of the current regulatory regime is small. The welfare analysis suggests that the current regulation framework is unnecessary, since it constrained the profit of TV channels without improving significantly the welfare of TV viewers.

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    File URL: http://www.netinst.org/Zhang_16-06.pdf
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    Paper provided by NET Institute in its series Working Papers with number 16-06.

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    Length: 38 pages
    Date of creation: Sep 2016
    Handle: RePEc:net:wpaper:1606
    Contact details of provider: Web page: http://www.NETinst.org/

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