Abstract
Economists have argued for many years about the extent of economies of geographic scope in television advertising. This paper maintains that previous studies could not correctly resolve this issue because they employed list prices, rather than transactions price data. In contrast to previous research, this paper reports transaction based prices from internal company documents. These transaction based data indicate that network advertising was substantially less costly per viewer than equivalent coverage using local spot television advertising. Local firms, unable to use network advertising as did their national competitors, faced high per viewer advertising costs as a result.
Similar content being viewed by others
References
Arndt, Johan, and Julian Simon. "Advertising and Economies of Scale: Critical Comments on the Evidence."Journal of Industrial Economics, 32, No. 2 (December 1983), 229–242.
Bain, Joe.Barriers to New Competition. Cambridge, Mass.: Harvard University Press, 1956.
Blake, Harlan, and Jack Blum. "Network Television Rate Practices: A Case Study in the Failure of Social Control of Price Discrimination."Yale Law Journal, 74 (July 1965), 1339–1401.
Blank, David. "Television Advertising: The Great Discount Illusion or Tonipandy Revisited."Journal of Business, 41 (January 1968), 10–38.
Comanor, William, and Thomas Wilson.Advertising and Market Power. Cambridge, Mass.: Harvard University Press, 1974.
Ferguson, James.Advertising and Competition: Theory, Measurement, Fact. Cambridge, Mass.: Ballinger, 1974.
Fisher, Franklin, John McGowan, and David Evans. "The Audience Revenue Relationship for Local Television Stations."Bell Journal of Economics, 11, No. 2 (Autumn 1980), 694–708.
Fournier, Gary, and Donald Martin. "Does Government-Restricted Entry Produce Marketpower?: New Evidence from the Market for Television Advertising."Bell Journal of Economics, 14 (Spring 1983), 44–56.
FTC vs. General Foods Corporation,In The Matter of General Foods Corporation, A Corporation. Federal Trade Commission, Docket No. 9085.
General Foods Corp., 3Trade Reg. Rep. (1963–1965) Transfer Binder Par. 17161 (FTC 1964).
Hilke, John. "Advertising and the Areeda-Turner and Williamson Rules."Journal of Reprints for Antitrust Law and Economics, 10, No. 1 (1980), 367–398.
Hilke, John, and Philip Nelson. "Caveat Innovator: Strategic and Structural Characteristics of New Product Introductions."Journal of Economic Behavior and Organization, 8 (1987), 213–229.
--. "Strategic Behavior and Attempted Monopolization: The Coffee (General Foods) Case." in John Kwoka and Lawrence White, Eds.,The Antitrust Revolution. Glenview, Ill.: Scott, Foresman and Company, 1988, 208–240.
————. "Noisy Advertising and the Predation Rule in Antitrust Analysis."American Economic Review, 74, No. 2 (May 1984), 367–371.
Leading National Advertisers, Inc. Competitive Brand Quarterly, (1971).
Levmore, Saul.Small Firm Disadvantages in Television Advertising. Yale University (Unpublished thesis), December 1978.
Mather, L. "Advertising and Mergers in the Food Manufacturing Industries." North Central Regional Research Project #117, (Unpublished) July 1979.
Mueller, Willard F. "Competitive Significance for the Beer Industry of Exclusive Advertising Rights Granted National Brewers in Major Network Sports Events." Submission to the Department of Justice and Federal Trade Commission, (Unpublished) January 15, 1979.
Peterman, John. "The Clorox Case and The Television Rate Structure."Journal of Law and Economics, 11, No. 2 (October 1968), 321–422.
——. "Differences Between the Levels of Spot and Network Television Advertising Rates."Journal of Business, 52 (October 1979), 549–561.
Peterman, John, and Michael Carney. "A Comment on Network Television Price Discrimination."Journal of Business, 51 (April 1978), 343–352.
Porter, Michael. "Intraband Choice, Media Mix and Market Performance."American Economic Review, 66, No. 2 (May 1976), 398–406.
Procter and Gamble Co., 3Trade Reg. Rep. (1963–1965) Transfer Binder par. 16673 (FTC 1963).
Scala, James. "Advertising and Shared Monopoly in Consumer Goods Industries."Columbia Journal of Law and Social Problems, 9 (1973), 241–278.
Stigler, George.The Organization of Industry. Homewood, Ill.: Irwin, 1968.
Author information
Authors and Affiliations
Rights and permissions
About this article
Cite this article
Hilke, J.C., Nelson, P.B. An empirical note from case documents on the economies of network television advertising. Rev Ind Organ 4, 131–145 (1989). https://doi.org/10.1007/BF02284665
Issue Date:
DOI: https://doi.org/10.1007/BF02284665