Advertising Competition in the Free-to-Air TV Broadcasting Industry

Arbeitspapier

This paper empirically investigates the advertising competition in the French broadcast television industry within a two-sided market framework. We use a unique dataset on the French broadcast television market including audience, prices, and quantities of advertising of twenty-one TV channels from March 2008 to December 2013. We specify a structural model of oligopoly competition and identify the shape and magnitude of the feedback loop between TV viewers and advertisers. We also implement a simple procedure to identify the conduct of firms on the market. We find that the nature of competition in the French TV advertising market is of the Cournot type. Further, we provide empirical evidence that the price-cost margin is not a good indicator of the market power of firms operating on two-sided markets. Finally, we provide a competition analysis. The counterfactual simulation suggests that the merger of advertising sales houses would not have significantly affected the equilibrium outcomes in this industry because of the strong network externalities between TV viewers and advertisers. These results provide a critical evaluation of the 2010 decision of the French competition authority to authorize the acquisition of two broadcast TV channels by a large media group under behavioral remedies.

Show object

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 6461

Classification and Topics

• Classification: Wirtschaft ; Firm Behavior: Empirical Analysis ; Antitrust Law ; Oligopoly and Other Imperfect Markets ; Firm Organization and Market Structure ; Monopolization; Horizontal Anticompetitive Practices ; Advertising
• Subject: advertising ; competition ; media ; two-sided market ; market conduct

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Ivaldi, Marc ; Zhang, Jiekai
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2017

Further information

• Handle: http://hdl.handle.net/10419/161900