Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/161900
Authors: 
Ivaldi, Marc
Zhang, Jiekai
Year of Publication: 
2017
Series/Report no.: 
CESifo Working Paper 6461
Abstract: 
This paper empirically investigates the advertising competition in the French broadcast television industry within a two-sided market framework. We use a unique dataset on the French broadcast television market including audience, prices, and quantities of advertising of twenty-one TV channels from March 2008 to December 2013. We specify a structural model of oligopoly competition and identify the shape and magnitude of the feedback loop between TV viewers and advertisers. We also implement a simple procedure to identify the conduct of firms on the market. We find that the nature of competition in the French TV advertising market is of the Cournot type. Further, we provide empirical evidence that the price-cost margin is not a good indicator of the market power of firms operating on two-sided markets. Finally, we provide a competition analysis. The counterfactual simulation suggests that the merger of advertising sales houses would not have significantly affected the equilibrium outcomes in this industry because of the strong network externalities between TV viewers and advertisers. These results provide a critical evaluation of the 2010 decision of the French competition authority to authorize the acquisition of two broadcast TV channels by a large media group under behavioral remedies.
Subjects: 
advertising
competition
media
TV
two-sided market
market conduct
JEL: 
D22
K21
L13
L22
L41
M37
Document Type: 
Working Paper

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