A Comment on “Is Having More Channels Really Better? A Model of Competition Among Commercial Television Broadcasters”

  • Authors:

  • Shan-Yu Chou;Chi-Cheng Wu

  • Affiliations:

  • Department of Business Administration, National Taiwan University, 1 Section 4, Roosevelt Road, Taipei 106, Taiwan, Republic of China;Department of Business Management, National Sun Yat-Sen University, 70 Lianhai Road, Kaohsiung 804, Taiwan, Republic of China

  • Venue:
  • Marketing Science
  • Year:
  • 2006

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Abstract

This paper shows that the analysis of Liu et al. (2004) contains a substantive error---the asserted pure-strategy Nash equilibrium leading to their Theorems 1 and 2 is really not an equilibrium. We show that in their model, either pure-strategy Nash equilibria do not exist or, unlike their asserted main result, when a pure-strategy equilibrium exists, increasing the number of commercial television broadcasters does not result in lower-quality programs. Possible modifications of Liu et al.'s model that may help restore the desired result are discussed.