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ADVERTISING, COMPETITION AND ENTRY IN MEDIA INDUSTRIES *
Author(s) -
CRAMPES CLAUDE,
HARITCHABALET CAROLE,
JULLIEN BRUNO
Publication year - 2009
Publication title -
the journal of industrial economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.93
H-Index - 77
eISSN - 1467-6451
pISSN - 0022-1821
DOI - 10.1111/j.1467-6451.2009.00368.x
Subject(s) - competition (biology) , advertising , business , dimension (graph theory) , barriers to entry , quality (philosophy) , welfare , economic welfare , free entry , marketing , economics , industrial organization , market structure , mathematics , market economy , ecology , pure mathematics , biology , philosophy , epistemology
This paper presents a model of media competition with free entry when media platforms are financed both from advertising receipts and customers' subscriptions. We establish a relationship between the equilibrium levels of prices, advertising and entry, the welfare maximizing levels and the advertising technology. Under constant or increasing returns to scale in the audience size, we find an excessive level of entry and an insufficient level of advertising. We then extend the analysis along several dimensions: the price as a strategic variable on the market for advertising, free media platforms and the media quality dimension.