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Competitive provision of tune-ins under common private information

Celik, L. ORCID: 0000-0002-7668-6358 (2016). Competitive provision of tune-ins under common private information. International Journal of Industrial Organization, 44, pp. 113-122. doi: 10.1016/j.ijindorg.2015.10.002

Abstract

Television (TV) stations forego millions of dollars of advertising revenues by airing tune-ins (preview advertisements) for their upcoming programs. In this paper, I analyze the equilibrium as well as welfare properties of tune-ins in a duopolistic TV market that lasts for two periods. Importantly, each TV station is fully informed about its own as well as its rival's program. Viewers receive information via tune-ins, if any, or alternatively by sampling a program for a few minutes (and switching across stations). I find that equilibrium tune-in decisions do not necessarily depend on TV stations' knowledge of their rival's program. In this case, the opportunity costs of tune-ins could be so high that a regime without any tune-ins may be socially better. However, when tune-ins depend on both of the upcoming programs, it is possible that they enhance welfare by helping viewers avoid some of the inefficient program sampling they would otherwise do in a regime without any tune-ins.

Publication Type: Article
Additional Information: © Elsevier 2016. This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/
Publisher Keywords: Informative advertising, Information disclosure, Tune-ins, Sampling
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HM Sociology
P Language and Literature > PN Literature (General) > PN1990 Broadcasting
Departments: School of Arts & Social Sciences > Economics
URI: https://openaccess.city.ac.uk/id/eprint/23491
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