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Media competition enhances new-product entry: On the market for fake observations

Kjell Arne Brekke and Tore Nilssen ()

Information Economics and Policy, 2015, vol. 31, issue C, 59-66

Abstract: We show how increased competition in a media market may have implications for the competition between firms that are advertising in that medium. We apply a simple model of a product market with network externalities where firms buy advertising space in a media market and find that entry in the product market of a new and superior product is more likely, the more competitive the media market is. The paper is the first combining a study of media markets with a behavioral foundation of how advertising affects the demand for the advertised products.

Keywords: Advertising; Media; Availability heuristic; Network externalities (search for similar items in EconPapers)
JEL-codes: D03 L82 M37 L12 (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:eee:iepoli:v:31:y:2015:i:c:p:59-66

DOI: 10.1016/j.infoecopol.2015.03.001

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