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Estimation of the indirect network effect: On the example of television advertising

Author

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  • Khlyupina, Veronika

    (HSE University, Nizhnii Novgorod, Russia)

Abstract

The platform is an intermediary between groups of users whose direct interaction without the platform would be difficult or not possible at all. A distinctive feature of platform markets is the presence of indirect network effects, which consist of the fact that the demand of one group of users for platform services affects the demand of another group of users. In the presence of multidirectional indirect network effects, an important platform’s business decision is to determine the optimal volume of services that create negative network effects, since after a certain amount of them, the company starts to lose users on the other side of the platform. In order for the business model to be successful and profitable, the platform should take this relationship into account. This study makes a quantitative assessment of indirect network effects with the use of data on Russian TV channels. A statistically significant positive audience effect and negative advertising effect are obtained.

Suggested Citation

  • Khlyupina, Veronika, 2024. "Estimation of the indirect network effect: On the example of television advertising," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 73, pages 102-118.
    • Handle: RePEc:ris:apltrx:0493
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    More about this item

    Keywords

    non-transactional platform; audience platform; indirect network effects; television market; advertising; Russia.;
    All these keywords.

    JEL classification:

    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media

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