Advertising Competition in the French Free-To-Air Television Broadcasting Industry

Marc Ivaldi and Jiekai Zhang

No 10762, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper investigates empirically the advertising competition in the French free TV broadcasting industry in a two-sided framework. We specify a structural model of oligopoly competition of free TVs, and identify the shape and magnitude of the feedback loop between the TV viewers and the advertisers using French market data from March 2008 to December 2013. We contribute to the literature by implementing a simple procedure to test the conduct of TV channels, and identify that the nature of competition is of Cournot type on the French TV advertising market. In line with a decision of French anti-trust authority in 2010 which authorized the acquisition of two free broadcasting TV channels by a big media group under behavioral remedies, a series of competitive analysis has been conducted: We find firstly that the surpls of TV viewers keep raising after the decision of acquisition, suggesting that the implemented policy has been efficient in protecting the consumer surplus; Then, we find, by counterfactual simulation, that the merger of advertising agencies would not affect importantly the equilibrium outcomes in this industry, due to the strong network externalities between the TV viewers and the advertisers.

Keywords: Advertising; Competition; Media; Tv; Two-sided market; Market conduct; Behavioral remedies (search for similar items in EconPapers)
JEL-codes: D22 D43 K21 L11 L13 L22 L41 M37 (search for similar items in EconPapers)
Date: 2015-08
New Economics Papers: this item is included in nep-com, nep-cul, nep-ind, nep-law, nep-mkt and nep-net
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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