Price Dispersion and Legacy Discounts in the National Television Advertising Market

39 Pages Posted: 28 Oct 2021 Last revised: 29 Aug 2022

See all articles by Sylvia Hristakeva

Sylvia Hristakeva

University of California, Los Angeles (UCLA) - Anderson School of Management

Julie H. Mortimer

Boston College; National Bureau of Economic Research (NBER)

Date Written: August 25, 2021

Abstract

Advertising is an input for many final goods, and broadcast television comprises a significant portion of ad-spending in the U.S. Yet advertisers face different costs when purchasing national television ads. We seek to empirically confirm differences in firms’ costs to advertise nationally. Network-advertiser contracts are secret, so we combine data on ad placements and average prices of program airings to analyze price dispersion. We document that "legacy" advertisers with established broadcast relationships receive favorable prices for equivalent ad inventories. This may benefit incumbents and potentially soften price competition from newcomers in product markets.

Suggested Citation

Hristakeva, Sylvia and Mortimer, Julie H., Price Dispersion and Legacy Discounts in the National Television Advertising Market (August 25, 2021). Available at SSRN: https://ssrn.com/abstract=3911469 or http://dx.doi.org/10.2139/ssrn.3911469

Sylvia Hristakeva (Contact Author)

University of California, Los Angeles (UCLA) - Anderson School of Management ( email )

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Los Angeles, CA 90095-1481
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Julie H. Mortimer

Boston College ( email )

140 Commonwealth Avenue
Chestnut Hill, MA 02467
United States
617-552-3676 (Phone)

HOME PAGE: http://fmwww.bc.edu/ec/mortimer.php

National Bureau of Economic Research (NBER) ( email )

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Cambridge, MA 02138
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