A Theory of Broadcast Media Concentration and Commercial Advertising

Authors: Brendan M. Cunningham¹; Peter J. Alexander²

Source: Journal of Public Economic Theory, Volume 6, Number 4, October 2004 , pp. 557-575(19)

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Abstract:

We analyze a model in which the interaction of broadcasters, advertisers, and consumers determines the level of nonadvertising broadcasting produced and consumed. Our main finding is that an increase in concentration in broadcast media industries may lead to a decrease in the total amount of nonadvertising broadcasting. The strength of this inverse relationship depends, in part, on the behavioral response of the consumers to changes in advertising intensities. We also present a numerical general equilibrium solution to our model and demonstrate a positive relationship between consumer welfare and the number of firms in the broadcast industry.

Document Type: Research article

DOI: http://dx.doi.org/10.1111/j.1467-9779.2004.00180.x

Affiliations: 1: U.S. Naval Academy 2: Federal Communications Commission

Publication date: 2004-10-01