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Ad Clutter, Time Use, and Media Diversity

  • Simon P. Anderson
  • Martin Peitz
American Economic Journal: Microeconomics
vol. 15, no. 2, May 2023
(pp. 227-70)
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Abstract

We introduce advertising congestion along with a time use model of consumer choice among media. Both consumers and advertisers multihome. Higher equilibrium advertising levels ensue on less popular media platforms because platforms treat consumer attention as a common property resource: smaller platforms internalize less of the congestion from advertising and so advertise more. Platform entry raises the ad nuisance price to consumers and diminishes the quality of the consumption experience on all platforms. For consumer welfare this price effect of entry dominates the positive effect of more variety in some settings; thus, consumers will then be worse off after entry.

Citation

Anderson, Simon P., and Martin Peitz. 2023. "Ad Clutter, Time Use, and Media Diversity." American Economic Journal: Microeconomics, 15 (2): 227-70. DOI: 10.1257/mic.20210139

Additional Materials

JEL Classification

  • D11 Consumer Economics: Theory
  • D43 Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection
  • L13 Oligopoly and Other Imperfect Markets
  • L82 Entertainment; Media
  • M37 Advertising
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