Television News Scheduling Revisited - Television News...

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Television News Scheduling Revisited Pedro Barros Faculdade de Economia, Universidade Nova de Lisboa Abstract Existence problems have been pervasive in the economics literature on horizontal product differentiation. Adding a directional constraint to a standard Hotelling location model leads to a general result of non-existence of a pure strategy Nash equilibrium. Here we present a slightly different model where allowing for preferences over broadcasters, independent of arrival time at home, recovers existence of pure strategy Nash equilibria (although a mixed strategy equilibrium also exists). Citation: Barros, Pedro, (2008) "Television News Scheduling Revisited." Economics Bulletin, Vol. 12, No. 1 pp. 1-4 Submitted: January 14, 2008. Accepted: January 15, 2008. URL: http://economicsbulletin.vanderbilt.edu/2008/volume12/EB-08L10004A.pdf
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1 Introduction Since the seminal work of Hotelling (1929), the economics profession has been attracted by models of horizontal product differentiation. It turned out that equilibrium existence can be a serious problem, as shown by D’Aspremont, Gabszewicz and Thisse (1979). A special class of horizontal product differentiation models, characterized by directional constraints, has seldom being analyzed. 1 In a recent paper, Cancian, Bills and Bergstrom (1995) showed that such type of constraints may have important implications for equilib- rium existence. They proved that adding a directional constraint to a standard Hotelling location models leads to non-existence of a pure strategy Nash equilibrium. Similar models were developed by Nilssen and Sorgard (1996a,b). Nilssen and Sorgard (1996a) add a second choice varible, the programme profile, as well as different timings for the game. 2 They also experience pure-strategy Nash equilibrium existence problems. Nilssen and Sorgard (1996b) generalize the transport cost assumption: moving in one direction has different transport costs than moving in the other direction. They also consider simultaneous and sequential location decisions. Finally, Nilssen (1996) extends the analysis to more than two firms, but introduces sequential location decisions. Here, we present, keeping the example of news broadcast, a slightly different model where allowing for preferences over broadcasters, independent of arrival time at home, recovers existence of pure strategy Nash equilibria. Existence of preferences over broad- casters means that viewers may prefer to wait for the preferred station instead of watching the first broadcast available. In the proposed model, equilibria involve asymmetric locations for each station and
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Television News Scheduling Revisited - Television News...

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