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Competition for Viewers and Advertisers in a TV Oligopoly

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  • Hans Jarle Kind
  • Tore Nilssen
  • Lars Sørgard

Abstract

This study considers a model of a TV oligopoly where TV channels transmit advertising and viewers dislike such commercials. It is shown that advertisers make a lower profit the larger the number of TV channels. If TV channels are sufficiently close substitutes, there will be underprovision of advertising relative to social optimum. This study also finds that the more viewers dislike ads, the more likely it is that welfare is increasing in the number of advertising-financed TV channels. A publicly owned TV channel can partly correct market distortions, in some cases, by having a larger amount of advertising than private TV channels. It may even have advertising in cases where advertising is wasteful per se.

Suggested Citation

  • Hans Jarle Kind & Tore Nilssen & Lars Sørgard, 2007. "Competition for Viewers and Advertisers in a TV Oligopoly," Journal of Media Economics, Taylor & Francis Journals, vol. 20(3), pages 211-233.
    • Handle: RePEc:taf:jmedec:v:20:y:2007:i:3:p:211-233
    DOI: 10.1080/08997760701290708
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