Oligopoly in Advertiser-Supported Media

Posted: 2 Nov 2004

See all articles by Robert T. Masson

Robert T. Masson

Cornell University

Ram Mudambi

Temple University - Department of Strategic Management

Robert J. Reynolds

The Brattle Group - Washington Offices

Abstract

In this article advertiser supported media, such as television, are analyzed as an industry selling audiences to advertisers. A simple stylized model is used to demonstrate that increased competition leads to less of a price decline (in extreme cases, maybe even a price increase) than would be expected in other industries. This arises because audience diversion introduces terms similar to conjectural variations in equilibrium output. Further, in this model, it is shown that if greater competition makes advertisers better off, it makes media consumers worse off and vice versa. The extension to mixed subscriber-advertiser supported media is demonstrated to lead to similar, albeit attenuated, conclusions.

Keywords: Advertiser-supported media, oligopolistic competition

JEL Classification: L82, D43, L13

Suggested Citation

Masson, Robert T. and Mudambi, Ram and Reynolds, Robert J., Oligopoly in Advertiser-Supported Media. Available at SSRN: https://ssrn.com/abstract=612641

Robert T. Masson

Cornell University ( email )

Ithaca, NY 14853
United States

Ram Mudambi (Contact Author)

Temple University - Department of Strategic Management ( email )

Fox School of Business and Management
Philadelphia, PA 19122
United States
215-204-2099 (Phone)
215-204-8029 (Fax)

HOME PAGE: http://sbm.temple.edu/~rmudambi/index.html

Robert J. Reynolds

The Brattle Group - Washington Offices ( email )

1850 M Street NW
Suite 1200
Washington, DC 20036

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