Programming and Advertising Competition in the Broadcasting Industry

13 Pages Posted: 17 Oct 2004

See all articles by Jean J. Gabszewicz

Jean J. Gabszewicz

Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE)

Didier Laussel

University of Angers - Research Group in Quantitative Saving (GREQAM); University of the Mediterranean

Nathalie Sonnac

Université Paris II

Abstract

We analyze competition between two private television channels that derive their profits from advertising receipts. These profits are shown to be proportional to total population advertising attendance. The channels play a sequential game in which they first select their profiles (program mixes) and then their advertising ratios. We show that these ratios play the same role as prices in usual horizontal differentiation models. We prove that whenever ads' interruptions are costly for viewers the program mixes of the channels never converge but that the niche strategies are less effective and that the channel profiles are closer as advertising aversion becomes stronger.

Suggested Citation

Gabszewicz, Jean J. and Laussel, Didier and Sonnac, Nathalie, Programming and Advertising Competition in the Broadcasting Industry. Journal of Economics & Management Strategy, Vol. 13, No. 4, pp. 657-669, December 2004. Available at SSRN: https://ssrn.com/abstract=605182

Jean J. Gabszewicz (Contact Author)

Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE) ( email )

34 Voie du Roman Pays
B-1348 Louvain-la-Neuve, b-1348
Belgium

Didier Laussel

University of Angers - Research Group in Quantitative Saving (GREQAM) ( email )

Centre de la Vieille Charité
2, rue de la Charité
Marseille, 13002
France

University of the Mediterranean

58, Bd Charles Livon
Marseille, 13 002
France

Nathalie Sonnac

Université Paris II ( email )

35, ave. MacMahon
75017 Paris, 75006
France

Register to save articles to
your library

Register

Paper statistics

Downloads
27
Abstract Views
1,716
PlumX Metrics