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Media Competition on the Internet

Listed author(s):
  • Barros Pedro P

    ()

    (Universidade Nova de Lisboa)

  • Kind Hans Jarle

    ()

    (Norwegian School of Economics and Business Administration)

  • Nilssen Tore

    ()

    (University of Oslo)

  • Sørgard Lars

    ()

    (Norwegian Competition Authority)

We present a model of competition between two advertising-financed media firms when consumers dislike advertising. We apply the model to analyze competition between Internet portals and find that equilibrium prices of advertising are higher the less differentiated the portals are perceived to be. Moreover, we find that the portals' aggregate profit increases if they integrate vertically with advertisers. This is true even if there is perfect competition between advertisers for advertising space. But if the portals are close substitutes, then it is profitable for one of the portals not to combine with an advertiser, and we end up with an asymmetric equilibrium with only one vertical merger - despite aggregate profits being higher with two.

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File URL: https://www.degruyter.com/view/j/bejeap.2004.4.issue-1/bejeap.2004.4.1.1343/bejeap.2004.4.1.1343.xml?format=INT
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Article provided by De Gruyter in its journal The B.E. Journal of Economic Analysis & Policy.

Volume (Year): 4 (2005)
Issue (Month): 1 (January)
Pages: 1-20

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Handle: RePEc:bpj:bejeap:v:topics.4:y:2005:i:1:n:32
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References listed on IDEAS
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  1. Tore Nilssen & Lars Sørgard, 1998. "Time Schedule and Program Profile: TV News in Norway and Denmark," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 7(2), pages 209-235, 06.
  2. Simon P. Anderson & Stephen Coate, 2000. "Market Provision of Public Goods: The Case of Broadcasting," NBER Working Papers 7513, National Bureau of Economic Research, Inc.
  3. Nilssen,T. & Sorgard,L., 2001. "The TV industry : advertising and programming," Memorandum 18/2001, Oslo University, Department of Economics.
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