Universität zu Köln

Kerkhof, Anna and Muenster, Johannes (2015). Quantity restrictions on advertising, commercial media bias, and welfare. J. Public Econ., 131. S. 124 - 142. LAUSANNE: ELSEVIER SCIENCE SA. ISSN 0047-2727

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Abstract

We study the welfare effect of a quantity restriction on advertising in free-to-air television (and other advertising financed media) in the presence of commercial media bias. Broadcasters face a trade-off between increasing the number of viewers by sending content that is highly valued by viewers, and increasing the price of advertising by choosing advertiser friendly content. A cap on advertising drives the per-viewer price of ads up; thus, content improves for viewers. Therefore, the cap can be welfare enhancing, even when viewers are not ad averse. Competition among broadcasters makes it more likely that a cap on advertising improves welfare. Thus, there is a complementarity between regulation and competition on this market. We also show that a tax on advertising revenues has quite different effects than a cap on advertising quantity. (C) 2015 The Authors. Published by Elsevier B.V.

Item Type:	Journal Article
Creators:	Creators Email ORCID ORCID Put Code Kerkhof, Anna UNSPECIFIED UNSPECIFIED UNSPECIFIED Muenster, Johannes UNSPECIFIED UNSPECIFIED UNSPECIFIED
URN:	urn:nbn:de:hbz:38-388047
DOI:	10.1016/j.jpubeco.2015.09.004
Journal or Publication Title:	J. Public Econ.
Volume:	131
Page Range:	S. 124 - 142
Date:	2015
Publisher:	ELSEVIER SCIENCE SA
Place of Publication:	LAUSANNE
ISSN:	0047-2727
Language:	English
Faculty:	Unspecified
Divisions:	Unspecified
Subjects:	no entry
Uncontrolled Keywords:	Keywords Language COMPETITION; PROVISION; ENTRY; MODEL Multiple languages Economics Multiple languages
URI:	http://kups.ub.uni-koeln.de/id/eprint/38804