Advertising and the Media
This paper argues that advertising should be regarded as a transaction between a consumer and a firm that potentially generates a mutual benefit. We develop that there exists a problem of adverse selection, however, which makes it impossible to establish direct markets for advertising. The media is viewed as an intermediary that can channel advertising and allocate it efficiently by screening consumers. This screening process may result in excessive prices of media products even in competitive markets, over- or underprovision of advertising, and in an overprovision of media quality for high income consumers (relative to first best levels). If consumer's quality preferences are sufficiently heterogeneous, the first best can be achieved.
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.:
- Sendhil Mullainathan & Andrei Shleifer, 2005.
"The Market for News,"
American Economic Review,
American Economic Association, vol. 95(4), pages 1031-1053, September.
- Mussa, Michael & Rosen, Sherwin, 1978. "Monopoly and product quality," Journal of Economic Theory, Elsevier, vol. 18(2), pages 301-317, August.
- GABSZEWICZ, Jean J. & LAUSSEL, Didier & SONNAC, Nathalie, .
"Press advertising and the ascent of the `Pensée Unique',"
CORE Discussion Papers RP
1512, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Gabszewicz, Jean J. & Laussel, Dider & Sonnac, Nathalie, 2001. "Press advertising and the ascent of the 'Pensee Unique'," European Economic Review, Elsevier, vol. 45(4-6), pages 641-651, May.
- 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.
- Jean-Charles Rochet & Jean Triole, 2002.
"Platform competition in two sided markets,"
LSE Research Online Documents on Economics
24929, London School of Economics and Political Science, LSE Library.
- Jean-Charles Rochet & Jean Tirole, 2003. "Platform Competition in Two-Sided Markets," Journal of the European Economic Association, MIT Press, vol. 1(4), pages 990-1029, 06.
- Jean-Charles Rochet & Jean Tirole, 2014. "Platform Competition in Two-Sided Markets," CPI Journal, Competition Policy International, vol. 10.
- Rochet, Jean-Charles & Tirole, Jean, 2003. "Platform Competition in Two-Sided Markets," IDEI Working Papers 152, Institut d'Économie Industrielle (IDEI), Toulouse.
- Jean-Charles Rochet & Jean Triole, 2002. "Platform Competition in Two Sided Markets," FMG Discussion Papers dp409, Financial Markets Group.
- Nathalie Sonnac, 2000. "Readers' Attitudes Toward Press Advertising: Are They Ad-Lovers or Ad-Averse?," Journal of Media Economics, Taylor & Francis Journals, vol. 13(4), pages 249-259.
- Nilssen,T. & Sorgard,L., 2001. "The TV industry : advertising and programming," Memorandum 18/2001, Oslo University, Department of Economics.
- Srinagesh, P. & Bradburd, R.M., 1988.
"Quality Distorsion By A Discriminating Monopolist,"
Department of Economics Working Papers
117, Department of Economics, Williams College.
- Kaiser, Ulrich, 2001.
"The effects of website provision on the demand for German women's magazines,"
ZEW Discussion Papers
01-69, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Ulrich Kaiser, 2002. "The Effects of Website Provision on the Demand for German Women's Magazines," NBER Working Papers 8806, National Bureau of Economic Research, Inc.
- Bagwell, Kyle, 2007. "The Economic Analysis of Advertising," Handbook of Industrial Organization, Elsevier.
- Martin Koschat & William Putsis, 2000. "Who Wants You When You're Old and Poor? Exploring the Economics of Media Pricing," Journal of Media Economics, Taylor & Francis Journals, vol. 13(4), pages 215-232.
- Nathalie Sonnac, 2000. "Readers’ Attitudes Toward Press Advertising : Are They Ad-Lovers or Ad-Averse ?," Working Papers 2000-28, Centre de Recherche en Economie et Statistique.
- Romer, Thomas, 1975. "Individual welfare, majority voting, and the properties of a linear income tax," Journal of Public Economics, Elsevier, vol. 4(2), pages 163-185, February.
- George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, Oxford University Press, vol. 84(3), pages 488-500.
- Michael Spence & Bruce Owen, 1977. "Television Programming, Monopolistic Competition, and Welfare," The Quarterly Journal of Economics, Oxford University Press, vol. 91(1), pages 103-126.
- Jack H. Beebe, 1977. "Institutional Structure and Program Choices in Television Markets," The Quarterly Journal of Economics, Oxford University Press, vol. 91(1), pages 15-37.
- Mark Armstrong, 2005.
"Competition in Two-Sided Markets,"
- 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.
- Franklin M. Fisher & John J. McGowan & David S. Evans, 1980. "The Audience-Revenue Relationship for Local Television Stations," Bell Journal of Economics, The RAND Corporation, vol. 11(2), pages 694-708, Autumn.
- Hellwig, Martin, 1987.
"Some recent developments in the theory of competition in markets with adverse selection ,"
European Economic Review,
Elsevier, vol. 31(1-2), pages 319-325.
- Hellwig,Martin, 1986. "Some recent developments in the theory of competition in markets with adverse selection," Discussion Paper Serie A 82, University of Bonn, Germany.
- Thompson, R Stephen, 1989. "Circulation versus Advertiser Appeal in the Newspaper Industry: An Empirical Investigation," Journal of Industrial Economics, Wiley Blackwell, vol. 37(3), pages 259-271, 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.
- Rosse, James N, 1970. "Estimating Cost Function Parameters without Using Cost Data: Illustrated Methodology," Econometrica, Econometric Society, vol. 38(2), pages 256-75, March.
- Meltzer, Allan H & Richard, Scott F, 1981. "A Rational Theory of the Size of Government," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 914-927, October.
- Roberts, Kevin W. S., 1977. "Voting over income tax schedules," Journal of Public Economics, Elsevier, vol. 8(3), pages 329-340, December.
- Häckner, Jonas & Nyberg, Sten, 2000. "Price Competition, Advertising and Media Market Concentration," Research Papers in Economics 2000:3, Stockholm University, Department of Economics.
- Peter O. Steiner, 1952. "Program Patterns and Preferences, and the Workability of Competition in Radio Broadcasting," The Quarterly Journal of Economics, Oxford University Press, vol. 66(2), pages 194-223.
- Bond, Eric W & Crocker, Keith J, 1991. "Smoking, Skydiving, and Knitting: The Endogenous Categorization of Risks in Insurance Markets with Asymmetric Information," Journal of Political Economy, University of Chicago Press, vol. 99(1), pages 177-200, February.
When requesting a correction, please mention this item's handle: RePEc:wpa:wuwpio:0403003. 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: (EconWPA)
If references are entirely missing, you can add them using this form.