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Mixing Media with Two-Part Tariffs

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Author Info
Hoernig, Steffen
Valletti, Tommaso

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Abstract

We consider a media market where consumers mix content offered by different firms and firms charge two-part tariffs. As compared to pure linear pricing (pay-per-view), firms make higher profits, while consumers are worse off and the allocation is not first-best. We also consider flat subscription fees and show that they make mixing unattractive. Both two-part tariffs and pay-per-view Pareto-dominate flat fees.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 5437.

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Date of creation: Jan 2006
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Handle: RePEc:cpr:ceprdp:5437

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Related research
Keywords: combinable products; flat fees; pay-per-view; two-part tariffs;

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Find related papers by JEL classification:
L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media

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References listed on IDEAS
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  1. ANDERSON, Simon P. & GABSZEWICZ, Jean J., 2005. "The media and advertising : a tale of two-sided markets," CORE Discussion Papers 2005088, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE). [Downloadable!]
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  2. d'Aspremont, C & Gabszewicz, Jean Jaskold & Thisse, J-F, 1979. "On Hotelling's "Stability in Competition"," Econometrica, Econometric Society, vol. 47(5), pages 1145-50, September. [Downloadable!] (restricted)
  3. Anderson, S. P. & Neven, D. J., 1989. "Market efficiency with combinable products," European Economic Review, Elsevier, vol. 33(4), pages 707-719, April. [Downloadable!] (restricted)
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  4. Jean J. Gabszewicz & Didier Laussel & Nathalie Sonnac, 2004. "Programming and Advertising Competition in the Broadcasting Industry," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 13(4), pages 657-669, December. [Downloadable!] (restricted)
  5. Esther Gal-Or & Anthony Dukes, 2003. "Minimum Differentiation in Commercial Media Markets," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 12(3), pages 291-325, 09. [Downloadable!] (restricted)
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