ADVERTISING, COMPETITION AND ENTRY IN MEDIA INDUSTRIES

This paper presents a model of media competition with free entry when media platforms are financed both from advertising receipts and customers' subscriptions. We establish a relationship between the equilibrium levels of prices, advertising and entry, the welfare maximizing levels and the adve...

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Bibliographic Details
Published in:The Journal of industrial economics 2009-03, Vol.57 (1), p.7-31
Main Authors: CRAMPES, CLAUDE, HARITCHABALET, CAROLE, JULLIEN, BRUNO
Format: Article
Language:English
Subjects:
Advertising
Advertising media
Comparative advertising
Competition
Consumer advertising
Consumer equilibrium
Consumer prices
Economic competition
Economic models
Economies of scale
Entertainment industries
Industrial economics
Market entry
Publishing industry
Quantitative Finance
Studies
Subscription prices
Symposium on Advertising and Disclosure
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Summary:This paper presents a model of media competition with free entry when media platforms are financed both from advertising receipts and customers' subscriptions. We establish a relationship between the equilibrium levels of prices, advertising and entry, the welfare maximizing levels and the advertising technology. Under constant or increasing returns to scale in the audience size, we find an excessive level of entry and an insufficient level of advertising. We then extend the analysis along several dimensions: the price as a strategic variable on the market for advertising, free media platforms and the media quality dimension.
ISSN:0022-1821
1467-6451
1467-6451
DOI:10.1111/j.1467-6451.2009.00368.x