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Price Coordination in Two-Sided Markets: Competition in the TV Industry

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  • Hans Jarle Kind
  • Tore Nilssen
  • Lars Sørgard

Abstract

The TV industry is a two-sided market where both advertisers and viewers buy access to the programs offered by competing TV channels. Under the current market structure advertising prices are typically set by TV channels while viewer prices are set by distributors (e.g. cable operators). The latter implies that the distributors partly internalize the competition between the TV channels, since they take into account the fact that a lower viewer price at one channel will harm rival channels. We nonetheless find that a shift to a market structure where both advertising prices and viewer prices are set competitively by the TV channels might increase joint industry profits. The reason is that this market structure, in contrast to the one we observe today, directly addresses the two-sidedness of the market. We also show that this is to the benefit for the viewers.

Suggested Citation

  • Hans Jarle Kind & Tore Nilssen & Lars Sørgard, 2010. "Price Coordination in Two-Sided Markets: Competition in the TV Industry," CESifo Working Paper Series 3004, CESifo.
    • Handle: RePEc:ces:ceswps:_3004
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    References listed on IDEAS

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    Cited by:

    1. Harald Nygard Bergh & Hans Jarle Kind & Bjørn-Atle Reme & Lars Sørgard, 2012. "Competition between Content Distributors in Two-Sided Markets," CESifo Working Paper Series 3885, CESifo.
    2. Evens, Tom, 2014. "Clash of TV platforms: How broadcasters and distributors build platform leadership," 25th European Regional ITS Conference, Brussels 2014 101429, International Telecommunications Society (ITS).
    3. Ballon, Pieter & Bleyen, Valérie-Anne & Donders, Karen & Lindmark, Sven, 2012. "The double "layered" platform structure of the audiovisual media industry: A case study of Flanders," 23rd European Regional ITS Conference, Vienna 2012 60344, International Telecommunications Society (ITS).

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    More about this item

    Keywords

    price coordination; two-sided markets; media economics;
    All these keywords.

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media

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