TIME-Konvergenz - Einige Ueberlegungen aus volkswirtschaftlicher Sicht
Driven by digitalization, convergence within the telecommunication and media sector is not only a today's phenomena, but will even become more important in the future. One of the most important dimensions of convergence is vertical integration, i.e. the merging of formerly independent firms along the value chain. Analyzing the economic aspects of vertical integration in the media and telecommunication sector, it is argued in this paper that convergence is clearly positive for the merging firms themselves. However, from the consumer perspective, there are positive as well as negative effects which do not allow for an unambiguous conclusion about convergence. The expected decrease in market prices due to a vanishing double monopoly markup is in favor of the demand side. On the other side, a vertical integrated firm will probably be able to foreclosure the access to the consumers against upstream firms (e.g. content producers), thus reducing the variety of media content. In the long run, this negative effect on product differentiation may even be strengthened by building up strategic entry barriers.
|Date of creation:||Jan 2003|
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- Nicholas Economides, 1995.
"The Economics of Networks,"
94-24, New York University, Leonard N. Stern School of Business, Department of Economics, revised Sep 1995.
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