2007-01-02 papers

on Cultural Economics

Issue of 2007–01–02
one paper chosen by
Roberto Zanola, Università degli Studi del Piemonte Orientale

Competition for Viewers and Advertisers in a TV Oligopoly By Hans Jarle Kind; Tore Nilssen; Lars Sørgard

Competition for Viewers and Advertisers in a TV Oligopoly

By:	Hans Jarle Kind; Tore Nilssen; Lars Sørgard
Abstract:	We consider a model of a TV oligopoly where TV channels transmit advertising and viewers dislike such commercials. We show that advertisers make a lower profit the larger the number of TV channels. If TV channels are sufficiently close substitutes, there will be underprovision of advertising relative to social optimum. We also find that the more viewers dislike ads, the more likely it is that welfare is increasing in the number of advertising financed TV channels. A publicly owned TV channel can partly correct market distortions, in some cases by having a larger amount of advertising than private TV channels. It may even have advertising in cases where advertising is wasteful per se.
Keywords:	television industry, advertising
JEL:	L82 M37
Date:	2006
URL:	https://d.repec.org/n?u=RePEc:ces:ceswps:_1862

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