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Effects of TV airtime regulation on advertising quality and welfare

Henriques, David (2020) Effects of TV airtime regulation on advertising quality and welfare. Information Economics and Policy. ISSN 0167-6245

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Identification Number: 10.1016/j.infoecopol.2020.100897

Abstract

This paper investigates how regulations that limit advertising airtime may affect advertising quality and social welfare. I show, first, conditions under which an advertising cap may reduce or improve the average quality of advertising broadcast on a free-to-air TV platform. Second, an advertising cap may reduce TV platform’s and firms’ profits, while the net effect on viewers’ welfare is ambiguous because the ad quality may decrease as a result of a regulatory cap offsetting the direct gain from watching fewer ads. The results suggest that a regulator that is trying to increase social welfare via regulation of the volume of advertising on TV should take the effect of advertising quality into consideration. Implementing an advertising cap without regard to ad quality may result in lower social welfare than leaving advertising airtime unregulated.

Item Type: Article
Official URL: https://www.sciencedirect.com/journal/information-...
Additional Information: © 2020 Elsevier B.V.
Divisions: Media and Communications
Subjects: H Social Sciences > HF Commerce
H Social Sciences > HV Social pathology. Social and public welfare. Criminology
JEL classification: D - Microeconomics > D6 - Welfare Economics > D62 - Externalities
M - Business Administration and Business Economics; Marketing; Accounting > M3 - Marketing and Advertising > M37 - Advertising
Date Deposited: 12 Oct 2020 11:09
Last Modified: 20 Jul 2021 00:32
URI: http://eprints.lse.ac.uk/id/eprint/106963

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