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Another Tale of Two-Sided markets

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  • Hans Jarle Kind

    ()
    (Norwegian School of Economics and Business Administration, Bergen, Norway)

  • Frank Staehler

    ()
    (Department of Economics, University of Otago)

Abstract

This note generalizes the frequently used Hotelling model for two-sided markets. We demonstrate an invariance theorem: advertisement levels neither depend on the media price nor on the location of the media firm. An increase in advertising revenues does not change location but only the media price. In conclusion, a Hotelling model of two-sided markets is equivalent to one of one-sided markets.

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File URL: http://www.business.otago.ac.nz/econ/research/discussionpapers/DP_0708.pdf
File Function: First version, 2007
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Bibliographic Info

Paper provided by University of Otago, Department of Economics in its series Working Papers with number 0708.

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Length: 10 pages
Date of creation: Jun 2007
Date of revision: Jun 2007
Handle: RePEc:otg:wpaper:0708

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Web page: http://www.business.otago.ac.nz/econ
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Related research

Keywords: Hotelling; general density function; media; location;

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References

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  1. GABSZEWICZ, Jean J. & LAUSSEL, Didier & SONNAC, Nathalie, . "Press advertising and the political differentiation of newspapers," CORE Discussion Papers RP -1561, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  2. Rochet, Jean-Charles & Tirole, Jean, 2003. "Platform Competition in Two-Sided Markets," IDEI Working Papers 152, Institut d'Économie Industrielle (IDEI), Toulouse.
  3. GABSZEWICZ, Jean J. & LAUSSEL, Didier & SONNAC, Nathalie, 2000. "Does press advertising foster the “pensée unique”?," CORE Discussion Papers 2000008, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  4. repec:fth:inseep:2000-28 is not listed on IDEAS
  5. Crampes, Claude & Haritchabalet, Carole & Jullien, Bruno, 2006. "Advertising, Competition and Entry in Media Industries," IDEI Working Papers 374, Institut d'Économie Industrielle (IDEI), Toulouse.
  6. 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.
  7. Anderson, Simon P. & Goeree, Jacob K. & Ramer, Roald, 1997. "Location, Location, Location," Journal of Economic Theory, Elsevier, vol. 77(1), pages 102-127, November.
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