Scandinavian Working Papers in Economics

Discussion Paper Series in Economics,
Norwegian School of Economics, Department of Economics

No 24/2011: Media market concentration, advertising levels, and ad prices.

Simon P. Anderson (), Øystein Foros (), Hans Jarle Kind () and Martin Peitz ()
Additional contact information
Simon P. Anderson: University of Virginia, Postal: Norway
Øystein Foros: Department of Finance and Management Science, Postal: NHH , Department of Finance and Management Science Helleveien 30, N-5045 Bergen, Norway
Hans Jarle Kind: Dept. of Economics, Norwegian School of Economics and Business Administration, Postal: NHH , Department of Economics, Helleveien 30, N-5045 Bergen, Norway
Martin Peitz: University of Mannheim

Abstract: Standard media economics models imply that increased platform competition decreases ad levels and that mergers reduce per-viewer ad prices. The empirical evidence, however, is mixed. We attribute the theoretical predictions to the combined assumptions that there is no advertising congestion and that viewers single-home. Allowing for crowding in viewer attention spans for ads may reverse standard results, as does allowing viewers to multi-home.

Keywords: Media economics; pricing ads; advertising clutter; information congestion; mergers; entry.

JEL-codes: D11; D43; L13

10 pages, December 15, 2011

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