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Carriage of TV Channels in the UK: policy options and implications Report for the Department for Culture, Media and Sport

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Carriage of TV Channels in the UK: policy options and implications Report for the Department for Culture, Media and Sport

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In the following, we identify the unique subgame perfect equilibrium of the sequential game described above. Furthermore, government’s regulation is shown to reduce the diversity in the programs offered by the channels at equilibrium: the lower the upperlimit imposed by the government to the ad- vertising rate, the weaker the diversity in the programs! There are at least three papers closely related to the present analysis. Vaglio (1995) proposes a Hotelling-type model of the audience for TV- broadcasting which shares several properties with ours. 3 In particular, he also supposes that consumers are advertising-averse and notices that, due to this aversion, TV-channels face the dilemma of either making money with...

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