Keith Brown and Peter J. Alexander, Economics Letters, 2005.
We test the relationship between market structure, the price of advertising, and the number of viewers in broadcast televison markets, employing FCC license allocations as an instrument for structure. We find a positive relationship between concentration, advertising price, and viewership.
Keith Brown and Peter J. Alexander, International Journal of Media Management, 2004.
Bundling can be a pricing mechanism by which monopolists capture economic surplus from consumers. We suggest that given the cost structure of media markets, channel bundling in the cable and satellite market could also emerge in a competitive environment. A la carte channel pricing on cable television may or may not increase consumer welfare and could reduce total welfare. Because bundling may create other problems, policymakers may consider allowing cable and satellite networks to sell packages of channel space to viewers at a given price, allowing viewers to choose which channels they want in their packages. We term this option quasi-bundling.
Peter J. Alexander and Keith Brown, The Economic Regulation of Broadcasting Markets, edited by Paul Seabright and Juergen von Hagen, Cambridge University Press, 2007.
The
Federal Communications Commission has a statutory obligation to pursue
the public interest through it regulation of broadcast media. The FCC
has interpted its public interest obligation through the lens of
competition, diversity, and localism. While competition policy may be
tractable, the additional elements of diversity and localism lend
considerable complexity and nuance for policymakers. In fact,
accounting for diversity and localism changes the nature of competition
analysis. We divide the broadcast media economics literature into three
broad yet often inter-related strands. The first strand focuses on
market structure and differentiated products, and is historically the
best developed. The second strand explores what we call the "strategic"
approach, and examines the strategic interaction between broadcast
media firms, and its effect on broadcasters' choice of programming
content and advertising levels. The third strand focuses on the
political-economy aspects of broadcast media. We view the first and
third strands as particularly relevant to the competition, diversity,
and localism objectives of any thoughtful regulator.
Nodir Adilov and Peter J. Alexander, Economics Letters, 2006.
Under the assumption of a symmetric Nash equilibrium, Raskovich (2003) suggests that becoming "pivotal" via merger worsens a merging buyer's bargaining position. We generalize the pivotal buyer model to allow for an aysmmetric division of the surplus among firms. We show that a merging buyer's bargaining position increases post-merger if a bargaining power effect dominates a pivotal buyer effect. This result may be of interest to antitrust and regulatory agencies.
Brendan M. Cunningham and Peter J. Alexander, Journal of Public Economic Theory, 2004.
We analyze a model in which the interaction of broadcasters, advertisers, and consumers determines the level of nonadvertising broadcast produced and consumed. Our main finding is that an increase in concentration in broadcast media industries may lead to a decrease in the total amount of nonadvertising broadcasting. The strength of this inverse relationship depends, in part, on the behavioral response of consumers to changes in advertising intensities. We also present a numerical general equilibrium solution to our model and demonstrate a positive relationship betwen consumer welfare and the number of firms in the broadcast industry.
Peter J. Alexander and Brendan M. Cunningham, International Journal on Media Management, 2004.
The relationship betwen the structure of a market and the diversity of its product offerings has been extensively explored by theorists. We develop two measures of diversity and explore the content of local news for sixty stations and twenty designated market areas in the United States. Using a relative station-level diversity metric, ordinary least squares estimates imply that relative diversity of local news content decreases as market concentration increases. This result is not, however, robust to instrumental variables specification. Using a total market diversity metric, the Herfindahl-Hirshman Index is significant in OLS and robust to instrumental variable estimation. Because the total market diversity metric is arguably superior to the incremental metric as a measure of overall diversity, this result is useful - it suggests that the total diversity of local news content within a designated market area is sensitive to the level of concentration.