Pricing Power in Advertising Markets: Theory and Evidence

Matthew Gentzkow, Jesse Shapiro, Frank Yang and Ali Yurukoglu

American Economic Review, 2024, vol. 114, issue 2, 500-533

Abstract: Existing theories of media competition imply that advertisers will pay a lower price in equilibrium to reach consumers who multi-home across competing outlets. We generalize and extend this theoretical result and test it using data from television and social media advertising. We find that the model is a good match, qualitatively and quantitatively, to variation in advertising prices across demographic groups, outlets, platforms, and over time. We use the model to quantify the effects of competition within and across platforms.

JEL-codes: G34 K21 L13 L82 M37 (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (1)

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Working Paper: Pricing Power in Advertising Markets: Theory and Evidence (2022)
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DOI: 10.1257/aer.20220943

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