Competitive provision of tune-ins under common private information |
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| Affiliation: | 1. Kedge Business School, Domaine de Luminy, 13288 Marseille, France;2. School of Economics, The University of Sydney, NSW 2006, Australia;1. Moore School of Business, University of South Carolina, United States;2. Lancaster University Management School, United Kingdom;3. School of Economics, University of Sydney, Australia;1. Department of Economics and Management, University of Pisa, Via C. Ridolfi, 10, I-56124 Pisa (PI), Italy;2. RCEA, The Rimini Centre for Economic Analysis, Rimini, Italy;1. Department of Applied Economics, National University of Kaohsiung, Taiwan;2. Department of Economics, Chonnam National University, South Korea;1. ESADE Business School, Av. Pedralbes, 60-62, 08034 Barcelona, Spain;2. Departament d’Economia Aplicada, Universitat Autònoma de Barcelona, 08193 Bellaterra, Barcelona, Spain;3. Public–Private Sector Research Center, IESE Business School, Spain |
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| 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. |
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