Network effects in the press and advertising industries
AbstractGenerally, economists interested in network effects analyse these effects when the consumption externality created by the demand for the good is produced inside the industry itself. But it can be conceived that network effects take place from one industry to another. This happens when the utility of a good produced in a given industry varies with the size of the demand for a product produced in another industry. A particularly significant example of this phenomenon is provided by the interaction between the media and advertising industries. To illustrate the consequences of these network effects, we consider an editor who is a monopolist both in the press and advertising markets. In both markets, he faces a continuum of customers. In the press industry, these customers (readers) vary according to their willingness to pay for the newspaper, but also with their attitudes toward advertising: some of them are advertising-lovers while the others are advertising-averse. On the advertising market, advertisers vary according to their willingness to pay for an ad in the newspaper, which also depends positively on its leadership's size. We characterise the monopoly solution in terms of the monopolist's instruments: the price of the newspaper and the advertising rate.
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 Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 2002062.
Date of creation: 00 Oct 2002
Date of revision:
Contact details of provider:
Postal: Voie du Roman Pays 34, 1348 Louvain-la-Neuve (Belgium)
Fax: +32 10474301
Web page: http://www.uclouvain.be/core
More information through EDIRC
Other versions of this item:
- Jean J, Gabszewicz & Didier Laussel & Nathalie Sonnac, 2003. "Network Effects in the Press and Advertising Industries," Working Papers 2003-20, Centre de Recherche en Economie et Statistique.
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Cortade, Thomas, 2006. "A Strategic Guide on Two-Sided Markets Applied to the ISP Market," MPRA Paper 2602, University Library of Munich, Germany.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Alain GILLIS).
If references are entirely missing, you can add them using this form.