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

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  • Brekke, Kjell Arne
  • Nilssen, Tore

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.

Suggested Citation

  • Brekke, Kjell Arne & Nilssen, Tore, 2015. "Media competition enhances new-product entry: On the market for fake observations," Information Economics and Policy, Elsevier, vol. 31(C), pages 59-66.
    • Handle: RePEc:eee:iepoli:v:31:y:2015:i:c:p:59-66
    DOI: 10.1016/j.infoecopol.2015.03.001
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    References listed on IDEAS

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    Cited by:

    1. Dindaroğlu, Burak, 2018. "Competitive advertising on broadcasting channels and consumer welfare," Information Economics and Policy, Elsevier, vol. 42(C), pages 66-75.

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    More about this item

    Keywords

    Advertising; Media; Availability heuristic; Network externalities;
    All these keywords.

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies

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