nep-ind New Economics Papers
on Industrial Organization
Issue of 2006‒09‒23
two papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Sequential versus simultaneous market By Haldrup, Niels; Møllgaard, Peter; Nielsen, Claus Kastberg
  2. Public and Private Activity in Commercial TV Broadcasting By Hansen, Bodil O.; Keiding, Hans

  1. By: Haldrup, Niels (Department of Economics, Copenhagen Business School); Møllgaard, Peter (Department of Economics, Copenhagen Business School); Nielsen, Claus Kastberg (Department of Economics, Copenhagen Business School)
    Abstract: Delineation of the relevant market forms a pivotal part of most antitrust cases. The standard approach is sequential. First the product market is delineated, then the geographical market is defined. Demand and supply substitution in both the product dimension and the geographical dimension will normally be stronger than substitution in either dimension. By ignoring this one might decide first to define products narrowly and then to define the geographical extent narrowly ignoring the possibility of a diagonal substitution. These reflections are important in the empirical delineation of product and geographical markets. Using a unique data set for prices of Norwegian and Scottish salmon, we propose a methodology for simultaneous market delineation and we demonstrate that compared to a sequential approach conclusions will be reversed.
    Keywords: Relevant market; econometric delineation; salmon
    JEL: C30 K21 L41 Q22
    Date: 2005–03–15
  2. By: Hansen, Bodil O. (Department of Economics, Copenhagen Business School); Keiding, Hans (Department of Economics, Copenhagen Business School)
    Abstract: We consider a model of commercial television market, where private broadcasters coexist with a public television broadcaster. Assuming that the public TV station follows a policy of Ramsey pricing whereas the private stations are profit maximizers, we consider the equilibria in this market and compare with a situation where the public station is privatized and acts as another private TV broadcaster. A closer scrutiny of the market for commercial television leads to a distinction between target rating points, which are the prime unit of account in TV advertising, and net coverage, which is the final goal of advertisers. Working with net coverage as the fundamental concept, we exploit the models of competition between public and private price and quantity in order to show that privatization of the public TV station entails a welfare loss and results in TV advertising becoming more expensive.
    Keywords: TV broadcasting; imperfect competition; Ramsey pricing; welfare comparison
    JEL: L11 L33 L82
    Date: 2006–09–14

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