Advertising Competition in the Free-to-Air TV Broadcasting Industry

Marc Ivaldi and Jiekai Zhang

No 6461, CESifo Working Paper Series from CESifo

Abstract: This paper empirically investigates the advertising competition in the French broadcast television industry within a two-sided market framework. We use a unique dataset on the French broadcast television market including audience, prices, and quantities of advertising of twenty-one TV channels from March 2008 to December 2013. We specify a structural model of oligopoly competition and identify the shape and magnitude of the feedback loop between TV viewers and advertisers. We also implement a simple procedure to identify the conduct of firms on the market. We find that the nature of competition in the French TV advertising market is of the Cournot type. Further, we provide empirical evidence that the price-cost margin is not a good indicator of the market power of firms operating on two-sided markets. Finally, we provide a competition analysis. The counterfactual simulation suggests that the merger of advertising sales houses would not have significantly affected the equilibrium outcomes in this industry because of the strong network externalities between TV viewers and advertisers. These results provide a critical evaluation of the 2010 decision of the French competition authority to authorize the acquisition of two broadcast TV channels by a large media group under behavioral remedies.

Keywords: advertising; competition; media; TV; two-sided market; market conduct (search for similar items in EconPapers)
JEL-codes: D22 K21 L13 L22 L41 M37 (search for similar items in EconPapers)
Date: 2017
New Economics Papers: this item is included in nep-com, nep-cta, nep-cul, nep-ind, nep-law, nep-mkt and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_6461

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