IDEAS home Printed from https://ideas.repec.org/p/bon/boncrc/crctr224_2023_448.html
   My bibliography  Save this paper

Ad Blocking, Whitelisting, and Advertiser Competition

Author

Listed:
  • Martin Peitz
  • Anton Sobolev
  • Paul Wegener

Abstract

Advertisers post ads on publishers’ websites to attract the attention of consumers (who visit both available publishers). Since advertisers are competing in the product market, an advertiser may have an incentive to foreclose its competitor through excessive advertising. An ad blocker may be present and charge publishers for whitelisting. We fully characterize the equilibrium in which ad blocker, publishers, and advertisers make strategic pricing decisions. Under some conditions, the ad blocker sells whitelisting to one publisher and both publishers are strictly better off than without the ad blocker. Under other conditions, not only publishers but also advertisers or consumers are worse off.

Suggested Citation

  • Martin Peitz & Anton Sobolev & Paul Wegener, 2023. "Ad Blocking, Whitelisting, and Advertiser Competition," CRC TR 224 Discussion Paper Series crctr224_2023_448, University of Bonn and University of Mannheim, Germany.
    • Handle: RePEc:bon:boncrc:crctr224_2023_448
    as

    Download full text from publisher

    File URL: https://www.crctr224.de/research/discussion-papers/archive/dp448
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Jeffrey M. Perloff & Steven C. Salop, 1985. "Equilibrium with Product Differentiation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 52(1), pages 107-120.
    2. Gene M. Grossman & Carl Shapiro, 1984. "Informative Advertising with Differentiated Products," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 51(1), pages 63-81.
    3. Simon P. Anderson & Stephen Coate, 2005. "Market Provision of Broadcasting: A Welfare Analysis," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 72(4), pages 947-972.
    4. Anthony Dukes & Esther Gal–Or, 2003. "Negotiations and Exclusivity Contracts for Advertising," Marketing Science, INFORMS, vol. 22(2), pages 222-245, November.
    5. Valletti, Tommaso M & Hoernig, Steffen & Barros, Pedro P, 2002. "Universal Service and Entry: The Role of Uniform Pricing and Coverage Constraints," Journal of Regulatory Economics, Springer, vol. 21(2), pages 169-190, March.
    6. Justin P. Johnson, 2013. "Targeted advertising and advertising avoidance," RAND Journal of Economics, RAND Corporation, vol. 44(1), pages 128-144, March.
    7. Benjamin Shiller & Joel Waldfogel & Johnny Ryan, 2018. "The effect of ad blocking on website traffic and quality," RAND Journal of Economics, RAND Corporation, vol. 49(1), pages 43-63, March.
    8. Nelson, Philip, 1974. "Advertising as Information," Journal of Political Economy, University of Chicago Press, vol. 82(4), pages 729-754, July/Aug..
    9. Kenneth C. Wilbur, 2008. "A Two-Sided, Empirical Model of Television Advertising and Viewing Markets," Marketing Science, INFORMS, vol. 27(3), pages 356-378, 05-06.
    10. Andrea Prat & Tommaso Valletti, 2022. "Attention Oligopoly," American Economic Journal: Microeconomics, American Economic Association, vol. 14(3), pages 530-557, August.
    11. Gerard R. Butters, 1977. "Equilibrium Distributions of Sales and Advertising Prices," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 44(3), pages 465-491.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Anderson, Simon P. & Gabszewicz, Jean J., 2006. "The Media and Advertising: A Tale of Two-Sided Markets," Handbook of the Economics of Art and Culture, in: V.A. Ginsburgh & D. Throsby (ed.), Handbook of the Economics of Art and Culture, edition 1, volume 1, chapter 18, pages 567-614, Elsevier.
    2. Yuxin Chen & Qihong Liu, 2022. "Signaling Through Advertising When an Ad Can Be Blocked," Marketing Science, INFORMS, vol. 41(1), pages 166-187, January.
    3. Blasco, Andrea & Sobbrio, Francesco, 2012. "Competition and commercial media bias," Telecommunications Policy, Elsevier, vol. 36(5), pages 434-447.
    4. Belleflamme,Paul & Peitz,Martin, 2015. "Industrial Organization," Cambridge Books, Cambridge University Press, number 9781107687899.
    5. Peitz, Martin & Reisinger, Markus, 2014. "The Economics of Internet Media," Working Papers 14-23, University of Mannheim, Department of Economics.
    6. Attila Ambrus & Emilio Calvano & Markus Reisinger, 2016. "Either or Both Competition: A "Two-Sided" Theory of Advertising with Overlapping Viewerships," American Economic Journal: Microeconomics, American Economic Association, vol. 8(3), pages 189-222, August.
    7. Levent Çelik, 2008. "Monopoly Provision of Tune-ins," CERGE-EI Working Papers wp362, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    8. Serafin Grundl & You Suk Kim, 2019. "Consumer mistakes and advertising: The case of mortgage refinancing," Quantitative Marketing and Economics (QME), Springer, vol. 17(2), pages 161-213, June.
    9. Simon P. Anderson & Bruno Jullien, 2015. "The advertising-financed business model in two-sided media markets," Post-Print hal-02866192, HAL.
    10. Anthony Dukes & Qihong Liu & Jie Shuai, 2022. "Skippable Ads: Interactive Advertising on Digital Media Platforms," Marketing Science, INFORMS, vol. 41(3), pages 528-547, May.
    11. Song Lin, 2020. "Two-Sided Price Discrimination by Media Platforms," Marketing Science, INFORMS, vol. 39(2), pages 317-338, March.
    12. Anna E. Tuchman & Harikesh S. Nair & Pedro M. Gardete, 2018. "Television ad-skipping, consumption complementarities and the consumer demand for advertising," Quantitative Marketing and Economics (QME), Springer, vol. 16(2), pages 111-174, June.
    13. Bikram Ghosh & Axel Stock, 2010. "Advertising Effectiveness, Digital Video Recorders, and Product Market Competition," Marketing Science, INFORMS, vol. 29(4), pages 639-649, 07-08.
    14. Yang, Yupin & Lu, Qiang (Steven) & Tang, Guanting & Pei, Jian, 2015. "The Impact of Market Competition on Search Advertising," Journal of Interactive Marketing, Elsevier, vol. 30(C), pages 46-55.
    15. Laurent Cavenaile & Pau Roldan-Blanco, 2021. "Advertising, Innovation, and Economic Growth," American Economic Journal: Macroeconomics, American Economic Association, vol. 13(3), pages 251-303, July.
    16. Salvatore Piccolo & Piero Tedeschi & Giovanni Ursino, 2018. "Deceptive Advertising with Rational Buyers," Management Science, INFORMS, vol. 64(3), pages 1291-1310, March.
    17. Guofang Huang & Matthew Shum & Wei Tan, 2019. "Is pharmaceutical detailing informative? Evidence from contraindicated drug prescriptions," Quantitative Marketing and Economics (QME), Springer, vol. 17(2), pages 135-160, June.
    18. Kerkhof, Anna & Münster, Johannes, 2015. "Quantity restrictions on advertising, commercial media bias, and welfare," Journal of Public Economics, Elsevier, vol. 131(C), pages 124-141.
    19. Zhao Jiang & Dan Wu, 2022. "Targeting Precision in Imperfect Targeted Advertising: Implications for the Regulation of Market Structure and Efficiency," SAGE Open, , vol. 12(1), pages 21582440221, March.
    20. Richard Friberg & Erik Grönqvist, 2012. "Do Expert Reviews Affect the Demand for Wine?," American Economic Journal: Applied Economics, American Economic Association, vol. 4(1), pages 193-211, January.

    More about this item

    Keywords

    advertising; advertiser competition; ad blocker; whitelisting; imperfect competition;
    All these keywords.

    JEL classification:

    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bon:boncrc:crctr224_2023_448. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CRC Office (email available below). General contact details of provider: https://www.crctr224.de .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.