The impact of advertising length caps on TV: Evidence from the French broadcast TV industry

Jiekai Zhang ()
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Jiekai Zhang: INSEE-CREST, 150 Boulevard Gabriel Péri, 92245 MALAKOFF, France

No 16-06, Working Papers from NET Institute

Abstract: The quantities of advertising on TV are regulated in France, as in many other developed countries. This paper aims at understanding the welfare implication of such regulation. It is the first paper which investigates this issue with a structural econometric model in two-sided market framework. I construct an unique database of per hour data on 12 main broadcast TV stations in France during one year (2014) to estimate structurally the demand and supply in the French broadcast television industry. I identify the shadow prices of regulation caps on advertising quantities, using the difference in estimated marginal costs between the binding and non-binding regulation constraints. A counterfactual experiment is carried out to quantify the exact impact of regulation. The results suggest that the TV channels advertise more without regulation but the overall impact of the current regulatory regime is small. The welfare analysis suggests that the current regulation framework is unnecessary, since it constrained the profit of TV channels without improving significantly the welfare of TV viewers.

Keywords: Advertising; regulation; media; TV; two-sided market; structural estimation; shadow prices; welfare (search for similar items in EconPapers)
JEL-codes: C35 D22 D62 H44 L13 L22 L51 L82 L88 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2016-09
New Economics Papers: this item is included in nep-com, nep-cul and nep-ind
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Citations: View citations in EconPapers (5)

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