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A Theory of Broadcast Media Concentration and Commercial Advertising

Brendan Cunningham () and Peter J. Alexander

Journal of Public Economic Theory, 2004, vol. 6, issue 4, 557-575

Abstract: We analyze a model in which the interaction of broadcasters, advertisers, and consumers determines the level of nonadvertising broadcasting produced and consumed. Our main finding is that an increase in concentration in broadcast media industries may lead to a decrease in the total amount of nonadvertising broadcasting. The strength of this inverse relationship depends, in part, on the behavioral response of the consumers to changes in advertising intensities. We also present a numerical general equilibrium solution to our model and demonstrate a positive relationship between consumer welfare and the number of firms in the broadcast industry. Copyright 2004 Blackwell Publishing Inc..

Date: 2004
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Journal of Public Economic Theory is currently edited by Rabah Amir, Gareth Myles and Myrna Wooders

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