Abstract The television broadcasting industry is of crucial economic and social importance. Traditionally, this industry has been dominated by free-to-air TV (FTV) but due to technological progress, subscription-based pay TV (PTV) has emerged as a competing business model. A key question for the PTV broadcasters is whether to air commercials in addition to charging subscription fees. Based on a theoretical model of asymmetric competition between a PTV and an FTV broadcaster, we examine the effects of placing PTV advertising on broadcaster market strategies, viewer demands, broadcaster profits and consumer surplus. We find that introducing advertising on PTV can induce a higher viewer demand on this channel but a lower viewer demand on the FTV channel. Surprisingly, consumers can benefit through the introduction of advertising in PTV and broadcaster profits can increase if the viewer disutility of advertising is sufficiently large. Our study provides an analytical framework for choosing and implementing an optimal PTV strategy when an FTV competitor preexists in the market. Furthermore, our study derives implications for policymakers and regulatory authorities by showing that additional PTV advertising is not necessarily socially undesirable due to the strategic market reactions.

中文翻译：

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在付费电视中引入广告的效果：付费电视和免费电视之间的不对称竞争模型

摘要 电视广播行业具有至关重要的经济和社会重要性。传统上，该行业一直由免费电视 (FTV) 主导，但由于技术进步，基于订阅的付费电视 (PTV) 已成为一种竞争性商业模式。PTV 广播公司的一个关键问题是除了收取订阅费之外是否还播放广告。基于 PTV 和 FTV 广播公司之间不对称竞争的理论模型，我们检验了 PTV 广告对广播公司市场战略、观众需求、广播公司利润和消费者剩余的影响。我们发现，在 PTV 上引入广告可以提高该频道的观众需求，但会降低 FTV 频道的观众需求。出奇，如果观众对广告的负效用足够大，消费者可以通过在 PTV 中引入广告而受益，并且广播公司的利润可以增加。我们的研究提供了一个分析框架，用于在市场上存在 FTV 竞争对手时选择和实施最佳 PTV 策略。此外，我们的研究表明，由于战略性市场反应，额外的 PTV 广告不一定在社会上不受欢迎，从而对政策制定者和监管机构产生了影响。