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Market provision of program quality in the television broadcasting industry

Lin, Panlang (2011). Market provision of program quality in the television broadcasting industry. Contributions to Economic Analysis & Policy, 11(1):Article 17.

Abstract

This paper uses a simple model of duopoly competition to study the market provision of program quality offered by television broadcasters under three different regimes. In regime 1, two broadcasters are financed only with subscription fees (i.e., fee-based or pay TV). In regime 2, the two broadcasters generate their revenues only from advertising (i.e., free TV). In regime 3, one pay TV broadcaster competes with one free TV broadcaster. We show that the broadcasters in regime 3 (but not in regimes 1 and 2) vertically differentiate their channel programs if, for a given level of advertising market profitability, viewers strongly or weakly dislike the presence of advertising. In such cases, although the two pay TV broadcasters in regime 1 will unambiguously offer higher or lower quality programming than the two free TV broadcasters under regime 2, it is not clear which broadcaster will provide higher or lower program quality in regime 3 because this depends on the degree of horizontal differentiation between the channel programs. However, the levels of quality offered under regimes 1 and 2 fall between the quality levels offered by the two broadcasters in regime 3

Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:National licences > 142-005
Dewey Decimal Classification:330 Economics
Scopus Subject Areas:Social Sciences & Humanities > Economics and Econometrics
Social Sciences & Humanities > Economics, Econometrics and Finance (miscellaneous)
Uncontrolled Keywords:television broadcasting; quality provision; advertising; media
Language:English
Date:19 January 2011
Deposited On:29 Oct 2018 14:58
Last Modified:19 Oct 2024 01:38
Publisher:Berkeley Electronic Press
ISSN:1935-1682
OA Status:Green
Publisher DOI:https://doi.org/10.2202/1935-1682.2805
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  • Content: Published Version
  • Language: English
  • Description: Nationallizenz 142-005

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