Working Paper: CEPR ID: DP4771
Authors: Martin Peitz; Tommaso Valletti
Abstract: We compare the advertising intensity and content of programming in a market with competing media platforms. With pay-tv media platforms have two sources of revenues, advertising revenues and revenues from viewers. With free-to-air media platforms receive all revenues from advertising. We show that if viewers strongly dislike advertising, the advertising intensity is greater under free-to-air television. We also show that free-to-air television tends to provide more similar content whereas pay-tv stations differentiate their content. In addition, we compare the welfare properties of the two different schemes.
Keywords: advertising; media; product differentiation; two-sided markets
JEL Codes: D43; L13; L82
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Viewer preference against advertising (M37) | Advertising intensity under free-to-air television (M38) |
| Type of financing (advertising vs. subscription) (Z23) | Content strategy (M30) |
| Competition intensity (L13) | Welfare outcomes (I38) |