Advertising Competition in the French Free-to-Air Television Broadcasting Industry

44 Pages Posted: 11 Aug 2015

See all articles by Marc Ivaldi

Marc Ivaldi

Toulouse School of Economics; Centre for Economic Policy Research (CEPR)

Jiekai Zhang

Hanken School of Economics; Helsinki Graduate School of Economics

Date Written: August 2015

Abstract

This paper investigates empirically the advertising competition in the French free TV broadcasting industry in a two-sided framework. We specify a structural model of oligopoly competition of free TVs, and identify the shape and magnitude of the feedback loop between the TV viewers and the advertisers using French market data from March 2008 to December 2013. We contribute to the literature by implementing a simple procedure to test the conduct of TV channels, and identify that the nature of competition is of Cournot type on the French TV advertising market. In line with a decision of French anti-trust authority in 2010 which authorized the acquisition of two free broadcasting TV channels by a big media group under behavioral remedies, a series of competitive analysis has been conducted: We find firstly that the surplus of TV viewers keep raising after the decision of acquisition, suggesting that the implemented policy has been efficient in protecting the consumer surplus; Then, we find, by counterfactual simulation, that the merger of advertising agencies would not affect importantly the equilibrium outcomes in this industry, due to the strong network externalities between the TV viewers and the advertisers.

Keywords: advertising, behavioral remedies, competition, market conduct, media, TV, two-sided market

JEL Classification: D22, D43, K21, L11, L13, L22, L41, M37

Suggested Citation

Ivaldi, Marc and Zhang, Jiekai, Advertising Competition in the French Free-to-Air Television Broadcasting Industry (August 2015). CEPR Discussion Paper No. DP10762, Available at SSRN: https://ssrn.com/abstract=2642227

Marc Ivaldi (Contact Author)

Toulouse School of Economics ( email )

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Centre for Economic Policy Research (CEPR)

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United Kingdom

Jiekai Zhang

Hanken School of Economics ( email )

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Helsinki, Vaasa 65101
Finland

Helsinki Graduate School of Economics ( email )

P.O. Box 17 (Arkadiankatu 7)
Helsinki, FI00014
Finland

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