Advertising, Competition and Entry in Media Industries

25 Pages Posted: 27 Apr 2009

See all articles by Claude Crampes

Claude Crampes

Toulouse University

Bruno Jullien

University of Toulouse 1 - Toulouse School of Economics (TSE); Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute)

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Abstract

This paper presents a model of media competition with free entry when media platforms are financed both from advertising receipts and customers' subscriptions. We establish a relationship between the equilibrium levels of prices, advertising and entry, the welfare maximizing levels and the advertising technology. Under constant or increasing returns to scale in the audience size, we find an excessive level of entry and an insufficient level of advertising. We then extend the analysis along several dimensions: the price as a strategic variable on the market for advertising, free media platforms and the media quality dimension.

Suggested Citation

Crampes, Claude and Jullien, Bruno, Advertising, Competition and Entry in Media Industries. The Journal of Industrial Economics, Vol. 57, Issue 1, pp. 7-31, March 2009. Available at SSRN: https://ssrn.com/abstract=1378301 or http://dx.doi.org/10.1111/j.1467-6451.2009.00368.x

Claude Crampes (Contact Author)

Toulouse University ( email )

Manufacture des Tabacs
21 Allee de Brienne bat. F
Toulouse Cedex, F-31000
France

Bruno Jullien

University of Toulouse 1 - Toulouse School of Economics (TSE) ( email )

Place Anatole-France
Toulouse Cedex, F-31042
France

Centre for Economic Policy Research (CEPR)

London
United Kingdom

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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