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Quality competition and entry: a media market case

Author

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  • Maria Rosa Battaggion

    (University of Bergamo
    ICRIOS Bocconi University)

  • Serena Marianna Drufuca

    (Istituto per la Ricerca Sociale (IRS))

Abstract

The present paper provides an analysis of quality competition and entry in the context of two-sided media platforms. We provide a full characterization of a duopoly equilibrium in terms of advertising levels, subscription fees, and endogenous quality provision. Furthermore, we investigate the role of competition by considering potential entry. We show how the threat of entry shakes the equilibrium configuration by inducing lower quality differentiation. Finally, we describe the conditions under which a deterrence strategy in the form of a “limit quality” is feasible and profitable for the incumbent platform.

Suggested Citation

  • Maria Rosa Battaggion & Serena Marianna Drufuca, 2020. "Quality competition and entry: a media market case," Journal of Economics, Springer, vol. 130(1), pages 1-36, June.
    • Handle: RePEc:kap:jeczfn:v:130:y:2020:i:1:d:10.1007_s00712-019-00681-9
    DOI: 10.1007/s00712-019-00681-9
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    References listed on IDEAS

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    Cited by:

    1. Changying Li & Youping Li & Jianhu Zhang, 2023. "On the regulation of public broadcasting," Journal of Economics, Springer, vol. 138(2), pages 129-146, March.
    2. Yang Geng & Yulin Zhang & Jing Li, 2023. "Two-sided competition, platform services and online shopping market structure," Journal of Economics, Springer, vol. 138(2), pages 95-127, March.
    3. Frank Stähler & Leander Stähler, 2022. "Copyright Protection in the Digital Single Market: Potential Consequences for Content Platform Competition," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 61(1), pages 73-94, August.

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    More about this item

    Keywords

    Two-sided market; Media; Quality; Entry; Competition;
    All these keywords.

    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media

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