An empirical note from case documents on the economies of network television advertising

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.