American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Pricing Power in Advertising Markets: Theory and Evidence
American Economic Review
vol. 114,
no. 2, February 2024
(pp. 500–533)
Abstract
Existing theories of media competition imply that advertisers will pay a lower price in equilibrium to reach consumers who multi-home across competing outlets. We generalize and extend this theoretical result and test it using data from television and social media advertising. We find that the model is a good match, qualitatively and quantitatively, to variation in advertising prices across demographic groups, outlets, platforms, and over time. We use the model to quantify the effects of competition within and across platforms.Citation
Gentzkow, Matthew, Jesse M. Shapiro, Frank Yang, and Ali Yurukoglu. 2024. "Pricing Power in Advertising Markets: Theory and Evidence." American Economic Review, 114 (2): 500–533. DOI: 10.1257/aer.20220943Additional Materials
JEL Classification
- G34 Mergers; Acquisitions; Restructuring; Voting; Proxy Contests; Corporate Governance
- K21 Antitrust Law
- L13 Oligopoly and Other Imperfect Markets
- L82 Entertainment; Media
- M37 Advertising