Spatial Competition in the Network Television Industry

GSIA Working Paper No. 2001-E19

47 Pages Posted: 23 Jul 2001

See all articles by Ronald L. Goettler

Ronald L. Goettler

University of Rochester - Simon School of Business

Ron Shachar

Interdisciplinary Center (IDC) Herzliyah - Adelson School of Entrepreneuship

Multiple version iconThere are 2 versions of this paper

Date Written: April 17, 2001

Abstract

We present an empirical study of spatial competition and a methodology to estimate demand for products with unobservable characteristics. Using panel data, we estimate a discrete choice model with latent product attributes and unobserved heterogenous consumer preferences. Our application of the methodology to the network television industry yields estimates that are consistent with experts' views. Given our estimates, we compute Nash equilibria of a product location game, and find that firms' observed strategies (such as the degree of product differentiation) are generally optimal. Discrepancies between actual and optimal strategies reflect the networks' adherence to "rules of thumb," and possibly, bounded rationality behavior.

Keywords: Spatial competition, discrete choice, panel data, latent variables, consumer heterogeneity, maximum simulated likelihood, network television, state dependence

JEL Classification: C51, D12, D40, L10, L82

Suggested Citation

Goettler, Ronald L. and Shachar, Roni, Spatial Competition in the Network Television Industry (April 17, 2001). GSIA Working Paper No. 2001-E19. Available at SSRN: https://ssrn.com/abstract=275025 or http://dx.doi.org/10.2139/ssrn.275025

Ronald L. Goettler (Contact Author)

University of Rochester - Simon School of Business ( email )

Rochester, NY 14627
United States

Roni Shachar

Interdisciplinary Center (IDC) Herzliyah - Adelson School of Entrepreneuship ( email )

P.O. Box 167
Herzliya, 46150
Israel

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