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Market Segmentation in Two-Sided Markets: TV Rights for Premier League

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Author Info

  • Hans Jarle Kind
  • Lars Sørgard

Abstract

This paper analyzes market segmentation in a two-sided market that consists of media consumers and advertisers. The analysis is motivated by a European Court of Justice Decision in October 2011, which allowed viewers to take advantage of international price differences and buy access to Premier League TV matches from whichever country they like. We compare complete market segmentation with the new situation where consumers can purchase from abroad (allowing for passive sales). Clearly, such a change is likely to harm Premier League, which at present is sold at different prices to viewers in different countries. More surprisingly, we find that all viewers – including those that switch to purchasing from abroad - might also be harmed. We further show that the two-sidedness of the market may break down in the country that attracts foreign viewers.

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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 4060.

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Date of creation: 2013
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Handle: RePEc:ces:ceswps:_4060

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Related research

Keywords: market segmentation; two-sided market; price discrimination; media market; passive sales;

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References

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  1. Varian, Hal R, 1985. "Price Discrimination and Social Welfare," American Economic Review, American Economic Association, vol. 75(4), pages 870-75, September.
  2. Barros Pedro P & Kind Hans Jarle & Nilssen Tore & Sørgard Lars, 2005. "Media Competition on the Internet," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 4(1), pages 1-20, January.
  3. Caillaud, Bernard & Jullien, Bruno, 2003. " Chicken & Egg: Competition among Intermediation Service Providers," RAND Journal of Economics, The RAND Corporation, vol. 34(2), pages 309-28, Summer.
  4. Rochet, Jean-Charles & Tirole, Jean, 2003. "Platform Competition in Two-Sided Markets," IDEI Working Papers 152, Institut d'Économie Industrielle (IDEI), Toulouse.
  5. Hans Jarle Kind & Tore Nilssen & Lars Sørgard, 2009. "Business Models for Media Firms: Does Competition Matter for How They Raise Revenue?," Marketing Science, INFORMS, vol. 28(6), pages 1112-1128, 11-12.
  6. 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).
  7. 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.
  8. Qihong Liu & Konstantinos Serfes, 2007. "Price Discrimination in Two-Sided Markets," Working Papers 07-25, NET Institute, revised Sep 2007.
  9. E. Glen Weyl, 2010. "A Price Theory of Multi-sided Platforms," American Economic Review, American Economic Association, vol. 100(4), pages 1642-72, September.
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