Advertising on TV: Under- or Overprovision?

Hans Jarle Kind, Tore Nilssen () and Lars Sørgard

No 15/2005, Memorandum from Oslo University, Department of Economics

Abstract: We consider a model where TV channels transmit advertising, and viewers dislike such commercials. We find that the less differentiated the TV channels’ programs are, the lower is the amount of advertising in equilibrium. Relative to the social optimum, there is underprovision of advertising if TV channels are sufficiently close substitutes. In such a situation, a merger between TV channels may lead to more advertising and thus improve welfare. A publicly owned TV channel can partly correct market distortions, in some cases by having a larger amount of advertising than a private TV channel. It may actually have advertising even in cases where it is wasteful per se

Keywords: Television industry; Advertising; Public policy; Mixed oligopoly (search for similar items in EconPapers)
JEL-codes: L82 M37 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2005-05-22
New Economics Papers: this item is included in nep-com, nep-cul, nep-ind and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

Published in Journal of Media Economics, 2007, pages 211-233.

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