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Title:Advertising on TV: Under- or overprovision? PDF Logo
Authors:Kind, Hans Jarle
Nilssen, Tore
Sørgard, Lars
Issue Date:2005
Series/Report no.:Memorandum, Department of Economics, University of Oslo 2005,15
Abstract:We consider a model where TV channels transmit advertising, and viewers dislike such commercials. We find that the less differentiated the TV channels’ programs are, the lower is the amount of advertising in equilibrium. Relative to the social optimum, there is underprovision of advertising if TV channels are sufficiently close substitutes. In such a situation, a merger between TV channels may lead to more advertising and thus improve welfare. A publicly owned TV channel can partly correct market distortions, in some cases by having a larger amount of advertising than a private TV channel. It may actually have advertising even in cases where it is wasteful per se.
Subjects:Television industry
Advertising
Public policy
Mixed oligopoly
JEL:L82
M37
Document Type:Working Paper
Appears in Collections:Memorandum, Department of Economics, University of Oslo

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