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Market Shares in Two-Sided Media Industries

  • Hans Jarle Kind
  • Frank Stähler

This paper generalizes the frequently used Hotelling model for two-sided markets in order to determine the equilibrium market shares. We show that advertisement levels depend neither 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. If the distribution of consumers is asymmetric, market shares will be asymmetric as well, and the media firm with the larger market share charges the higher media price. The larger firm makes a higher profit per reader and in aggregate compared to its smaller rival.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2009/wp-cesifo-2009-07/cesifo1_wp2737.pdf
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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 2737.

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Date of creation: 2009
Date of revision:
Handle: RePEc:ces:ceswps:_2737
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  1. Nathalie Sonnac, 2000. "Readers' Attitudes Toward Press Advertising: Are They Ad-Lovers or Ad-Averse?," Journal of Media Economics, Taylor & Francis Journals, vol. 13(4), pages 249-259.
  2. Peitz, Martin & Valletti, Tommaso M., 2008. "Content and advertising in the media: Pay-tv versus free-to-air," International Journal of Industrial Organization, Elsevier, vol. 26(4), pages 949-965, July.
  3. Gabszewicz, Jean J & Laussel, Didier & Sonnac, Nathalie, 2002. " Press Advertising and the Political Differentiation of Newspapers," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 4(3), pages 317-34.
  4. repec:fth:inseep:2000-28 is not listed on IDEAS
  5. 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).
  6. Crampes, Claude & Haritchabalet, Carole & Jullien, Bruno, 2006. "Advertising, Competition and Entry in Media Industries," IDEI Working Papers 374, Institut d'Économie Industrielle (IDEI), Toulouse.
  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.
  8. Nathalie Sonnac, 2000. "Readers’ Attitudes Toward Press Advertising : Are They Ad-Lovers or Ad-Averse ?," Working Papers 2000-28, Centre de Recherche en Economie et Statistique.
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