As Seen on TV: Price Discrimination and Competition in Television Advertising

Gil, Ricard and Riera-Crichton, Daniel and Ruzzier, Christian (2016): As Seen on TV: Price Discrimination and Competition in Television Advertising.

Abstract

In this paper we examine the empirical relationship between price discrimination and competition in television advertising. While most empirical papers on the topic document a positive relationship, we find that price discrimination is negatively related to competition (as measured by the number of competing firms), a result that is consistent with conventional wisdom. Our results also show that only incumbent stations (unlike entrants) respond by engaging less in price discrimination when faced with a more competitive environment. Our evidence suggests that incumbents may use price discrimination as a strategic tool to accommodate entry - a strategy that has received scant attention in the existing entry literature.

• Item Type: MPRA Paper
• Language: English
• Keywords: competition, price discrimination, Spanish television
• Subjects: D - Microeconomics > D2 - Production and Organizations > D22 - Firm Behavior: Empirical Analysis; D - Microeconomics > D4 - Market Structure, Pricing, and Design > D43 - Oligopoly and Other Forms of Market Imperfection; L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L11 - Production, Pricing, and Market Structure ; Size Distribution of Firms; L - Industrial Organization > L8 - Industry Studies: Services > L82 - Entertainment ; Media

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