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How effective are advertising bans? On the demand for quality in two-sided media markets

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  • Greiner, Tanja
  • Sahm, Marco

Abstract

We study a two-sided markets model of two competing television broadcasters that offer content of differentiated quality to ad-averse consumers and advertising space to firms. As all consumers prefer high over low quality content, competition for viewers is vertical. By contrast, competition for advertisers is horizontal, taking into account the firms' targeted advertising motive. Analyzing the impact of an advertising ban on the high quality medium, we derive the following results: (i) total advertising volumes decrease;(ii) the viewer market share of the high-quality broadcaster and thus the equilibrium reception of high quality content decreases;(iii) welfare decreases;(iv) the low-quality broadcaster's profits will increase if and only if ad nuisance is small compared to ad effectiveness.

Suggested Citation

  • Greiner, Tanja & Sahm, Marco, 2018. "How effective are advertising bans? On the demand for quality in two-sided media markets," Munich Reprints in Economics 62822, University of Munich, Department of Economics.
    • Handle: RePEc:lmu:muenar:62822
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    Cited by:

    1. Qihong Liu & Daniel Nedelescu & Ji Gu, 2021. "The impact of strategic agents in two-sided markets," Journal of Economics, Springer, vol. 134(3), pages 195-218, December.
    2. Changying Li & Youping Li & Jianhu Zhang, 2023. "On the regulation of public broadcasting," Journal of Economics, Springer, vol. 138(2), pages 129-146, March.
    3. Gang Liu & Fengyue An, 2021. "Video Platforms’ Value-Added Service Investments and Pricing Strategies for Advertisers," Sustainability, MDPI, vol. 13(24), pages 1-24, December.
    4. Henriques, David, 2021. "Effects of TV airtime regulation on advertising quality and welfare," Information Economics and Policy, Elsevier, vol. 55(C).
    5. Margarita De-Miguel-Guzmán & Carlos Ronquillo-Bolaños & Alexander Sánchez-Rodríguez & Gelmar García-Vidal & Reyner Pérez-Campdesuñer & Rodobaldo Martínez-Vivar, 2020. "Analysis of the Effectiveness of Advertising Messages. Comparison by Media, Typology, and Schedule of Advertisements," Tržište/Market, Faculty of Economics and Business, University of Zagreb, vol. 32(1), pages 27-46.

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