Competition between Content Distributors in Two-Sided Markets
AbstractWe analyze strategic interactions between two competing distributors of an independent TV channel. Consistent with most of the relevant markets, we assume that the distributors set end-user prices while the TV channel sets advertising prices. Within this framework we show that the distributors have incentives to internalize the fact that viewers dislike ads on TV, but no incentives to internalize how the TV-channel’s profits from the advertising market are affected by end-user prices. This leads to some surprising results. First, we show that even undifferentiated distributors might make positive profits. Second, a TV channel might find it optimal to commit to not raising advertising revenue. Third, regulation of the advertising volume might be welfare improving even if the unregulated advertising level is too low from a social point of view.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3885.
Date of creation: 2012
Date of revision:
two-sided market; coordination; regulation; TV industry;
Find related papers by JEL classification:
- L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Peitz, Martin & Valletti, Tommaso, 2004.
"Content and Advertising in the Media: Pay-TV versus Free-To-Air,"
CEPR Discussion Papers
4771, C.E.P.R. Discussion Papers.
- Peitz, Martin & Valletti, Tommaso M., 2008. "Content and advertising in the media: Pay-tv versus free-to-air," International Journal of Industrial Organization, Elsevier, vol. 26(4), pages 949-965, July.
- Crawford, Gregory S & Yurukoglu, Ali, 2011.
"The Welfare Effects of Bundling in Multichannel Television Markets,"
CEPR Discussion Papers
8370, C.E.P.R. Discussion Papers.
- Gregory S. Crawford & Ali Yurukoglu, 2012. "The Welfare Effects of Bundling in Multichannel Television Markets," American Economic Review, American Economic Association, vol. 102(2), pages 643-85, April.
- Hans Jarle Kind & Tore Nilssen & Lars Sørgard, 2009.
"Business Models for Media Firms: Does Competition Matter for How They Raise Revenue?,"
INFORMS, vol. 28(6), pages 1112-1128, 11-12.
- Hans Jarle Kind & Tore Nilssen & Lars Sørgard, 2009. "Business Models for Media Firms: Does Competition Matter for how they Raise Revenue?," CESifo Working Paper Series 2713, CESifo Group Munich.
- GABSZEWICZ, Jean J. & LAUSSEL, Didier & SONNAC, Nathalie, .
"Programming and advertising competition in the broadcasting industry,"
CORE Discussion Papers RP
-1873, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Jean J. Gabszewicz & Didier Laussel & Nathalie Sonnac, 2004. "Programming and Advertising Competition in the Broadcasting Industry," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 13(4), pages 657-669, December.
- Hans Jarle Kind & Tore Nilssen & Lars Sørgard, 2010.
"Price Coordination in Two-Sided Markets: Competition in the TV Industry,"
CESifo Working Paper Series
3004, CESifo Group Munich.
- Jarle Kind, Hans & Nilssen, Tore & Sørgard, Lars, 2010. "Price Coordination in Two-Sided Markets: Competition in the TV Industry," Memorandum 18/2010, Oslo University, Department of Economics.
- Gregory Crawford, 2008.
"The discriminatory incentives to bundle in the cable television industry,"
Quantitative Marketing and Economics,
Springer, vol. 6(1), pages 41-78, March.
- Crawford, Gregory, 2005. "The Discriminatory Incentives to Bundle in the Cable Television Industry," Working paper 303, Regulation2point0.
- Armstrong, Mark, 1999. "Competition in the Pay-TV Market," Journal of the Japanese and International Economies, Elsevier, vol. 13(4), pages 257-280, December.
- Hans Jarle Kind & Tore Nilssen & Lars Sørgard, 2006.
"Competition for Viewers and Advertisers in a TV Oligopoly,"
CESifo Working Paper Series
1862, CESifo Group Munich.
- Hans Jarle Kind & Tore Nilssen & Lars S�rgard, 2007. "Competition for Viewers and Advertisers in a TV Oligopoly," Journal of Media Economics, Taylor & Francis Journals, vol. 20(3), pages 211-233.
- Germa Bel & Joan Calzada, 2007. "Access Pricing to a Digital Broadcasting Platform," Journal of Media Economics, Taylor & Francis Journals, vol. 20(1), pages 29-53.
- Andrei Hagiu & Robin S. Lee, 2011. "Exclusivity and Control," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 20(3), pages 679-708, 09.
- 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.
- Lal, Rajiv & Matutes, Carmen, 1994. "Retail Pricing and Advertising Strategies," The Journal of Business, University of Chicago Press, vol. 67(3), pages 345-70, July.
- Weeds, Helen, 2012. "TV Wars: Exclusive Content and Platform Competition in Pay TV," CEPR Discussion Papers 8781, C.E.P.R. Discussion Papers.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Julio Saavedra).
If references are entirely missing, you can add them using this form.