Spatial Competition in the Network Television Industry

Posted: 17 Jan 2002

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

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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 heterogeneous 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.

Suggested Citation

Goettler, Ronald L. and Shachar, Roni, Spatial Competition in the Network Television Industry. Available at SSRN: https://ssrn.com/abstract=290608

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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