Coordination, Differentiation and the Timing of Radio Commercials

Andrew Sweeting , Journal of Economics and Management Strategy 15(4) , 909-942 , December 2006.

This paper examines the timing of commercial breaks by contemporary music radio stations. A simple model shows that stations may prefer, all else equal, to choose the same times (coordination) or different times (differentiation) for breaks depending on how listeners behave. It also shows that how much commercials overlap in Nash equilibrium should vary in different ways with observable market characteristics, such as the number of stations, depending on whether stations prefer to coordinate or differentiate. Panel data on the timing of commercials by 1,094 stations provides consistent support for the hypothesis that stations prefer to coordinate on timing.

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