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Inter-firm price coordination in a two-sided market

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  • Kind, Hans Jarle
  • Nilssen, Tore
  • Sørgard, Lars

Abstract

In many two-sided markets we observe that there is a common distributor on one side of the market. One example is the TV industry, where TV channels choose advertising prices to maximize own profit and typically delegate determination of viewer prices to independent distributors. We show that in such a market structure the stronger the competition between the TV channels, the greater will joint profits in the TV industry be. We also show that joint profits may be higher if the wholesale contract between each TV channel and the distributor consists of a simple fixed fee rather than a two-part tariff.

Suggested Citation

  • Kind, Hans Jarle & Nilssen, Tore & Sørgard, Lars, 2016. "Inter-firm price coordination in a two-sided market," International Journal of Industrial Organization, Elsevier, vol. 44(C), pages 101-112.
  • Handle: RePEc:eee:indorg:v:44:y:2016:i:c:p:101-112
    DOI: 10.1016/j.ijindorg.2015.10.010
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    Cited by:

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    2. Baake, Pio & Sudaric, Slobodan, 2019. "Net neutrality and CDN intermediation," Information Economics and Policy, Elsevier, vol. 46(C), pages 55-67.
    3. Qihong Liu & Daniel Nedelescu & Ji Gu, 2021. "The impact of strategic agents in two-sided markets," Journal of Economics, Springer, vol. 134(3), pages 195-218, December.
    4. Balandina, Marina (Баландина, Марина) & Baskakova, Irina (Баскакова, Ирина), 2017. "The role of intermediate agents on the either way market of TV advertising [Роль Посредников На Двустороннем Рынке Телевизионной Рекламы]," Sotsium i vlast / Society and power, Russian Presidential Academy of National Economy and Public Administration, pages 96-103.
    5. Greiner, Tanja & Sahm, Marco, 2018. "How effective are advertising bans? On the demand for quality in two-sided media markets," Information Economics and Policy, Elsevier, vol. 43(C), pages 48-60.

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    More about this item

    Keywords

    Vertical relations; Advertising; Media economics;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing
    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising

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