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Ad Clutter, Time Use, and Media Diversity

Author

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  • Simon P. Anderson
  • Martin Peitz
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.

Suggested Citation

  • Simon P. Anderson & Martin Peitz, 2023. "Ad Clutter, Time Use, and Media Diversity," American Economic Journal: Microeconomics, American Economic Association, vol. 15(2), pages 227-270, May.
    • Handle: RePEc:aea:aejmic:v:15:y:2023:i:2:p:227-70
    DOI: 10.1257/mic.20210139
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    17. S Nageeb Ali & Greg Lewis & Shoshana Vasserman, 2023. "Voluntary Disclosure and Personalized Pricing," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 90(2), pages 538-571.
    18. Simon P. Anderson & André de Palma, 2001. "Product Diversity in Asymmetric Oligopoly: Is the Quality of Consumer Goods too Low?," Journal of Industrial Economics, Wiley Blackwell, vol. 49(2), pages 113-135, June.
    19. Simon P. Anderson & Joshua S. Gans, 2011. "Platform Siphoning: Ad-Avoidance and Media Content," American Economic Journal: Microeconomics, American Economic Association, vol. 3(4), pages 1-34, November.
    20. Peitz, Martin & Valletti, Tommaso M., 2008. "Content and advertising in the media: Pay-tv versus free-to-air," International Journal of Industrial Organization, Elsevier, vol. 26(4), pages 949-965, July.
    21. S Nageeb Ali & Greg Lewis & Shoshana Vasserman, 2023. "Voluntary Disclosure and Personalized Pricing," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 90(2), pages 538-571.
    22. Simon P. Anderson & Nisvan Erkal & Daniel Piccinin, 2020. "Aggregative games and oligopoly theory: short‐run and long‐run analysis," RAND Journal of Economics, RAND Corporation, vol. 51(2), pages 470-495, June.
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    24. Acemoglu, Daron & Jensen, Martin Kaae, 2013. "Aggregate comparative statics," Games and Economic Behavior, Elsevier, vol. 81(C), pages 27-49.
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    Cited by:

    1. Flavio Pino, 2022. "The microeconomics of data – a survey," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 49(3), pages 635-665, September.
    2. Diane Coyle & Leonard Nakamura, 2022. "Time Use, Productivity, and Household-centric Measurement of Welfare in the Digital Economy," International Productivity Monitor, Centre for the Study of Living Standards, vol. 42, pages 165-186, Spring.
    3. Shota Ichihashi & Byung-Cheol Kim, 2023. "Addictive Platforms," Management Science, INFORMS, vol. 69(2), pages 1127-1145, February.
    4. Martin Peitz, 2024. "Digital Attention Intermediaries," CRC TR 224 Discussion Paper Series crctr224_2024_520, University of Bonn and University of Mannheim, Germany.
    5. Peitz, Martin, 2020. "Economic policy for digital attention intermediaries," ZEW Discussion Papers 20-035, ZEW - Leibniz Centre for European Economic Research.
    6. Alagöz, Nazli, 2024. "Promotion and technological change in the music industry," Other publications TiSEM 511ceba0-62a0-4c60-a76c-f, Tilburg University, School of Economics and Management.

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    More about this item

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising

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