Handbook of Media Economics, vol 1A

CHAPTER 3

Empirical Modeling for Economics of

the Media: Consumer and Advertiser

Demand, Firm Supply and Firm Entry

Models for Media Markets

Steven T. Berry*, Joel Waldfogel

†

*

David Swensen Professor of Economics, Yale University, New Haven, CT, USA

†

Frederick R. Kappel Chair in Applied Economics, Carlson School of Management, University of Minnesota,

Minneapolis, MN, USA

Contents

3.1. Introduction 92

3.2. Audience Demand 93

3.2.1 Introduction 93

3.2.2 Classic Discrete Choice with Observed and Unobserved Product Characteristics 96

3.2.3 Identification of Demand Parameters 98

3.2.4 Example of a Single-Parameter Nested Logit 100

3.2.5 Further Examples of Audience Demand 101

3.3. Advertiser Demand 105

3.4. The Supply Side: Choice of Prices, Ad Quantity, and