Competition between Content Distributors in Two-Sided Markets
We analyze strategic interactions between two competing distributors of an independent TV channel. Consistent with most of the relevant markets, we assume that the distributors set end-user prices while the TV channel sets advertising prices. Within this framework we show that the distributors have incentives to internalize the fact that viewers dislike ads on TV, but no incentives to internalize how the TV-channel’s profits from the advertising market are affected by end-user prices. This leads to some surprising results. First, we show that even undifferentiated distributors might make positive profits. Second, a TV channel might find it optimal to commit to not raising advertising revenue. Third, regulation of the advertising volume might be welfare improving even if the unregulated advertising level is too low from a social point of view.
|Date of creation:||2012|
|Contact details of provider:|| Postal: Poschingerstrasse 5, 81679 Munich|
Phone: +49 (89) 9224-0
Fax: +49 (89) 985369
Web page: http://www.cesifo-group.de
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jarle Kind, Hans & Nilssen, Tore & Sørgard, Lars, 2010.
"Price Coordination in Two-Sided Markets: Competition in the TV Industry,"
18/2010, Oslo University, Department of Economics.
- 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 Group Munich.
- Hans Jarle Kind & Tore Nilssen & Lars Sørgard, 2009.
"Business Models for Media Firms: Does Competition Matter for how they Raise Revenue?,"
CESifo Working Paper Series
2713, CESifo Group Munich.
- Hans Jarle Kind & Tore Nilssen & Lars Sørgard, 2009. "Business Models for Media Firms: Does Competition Matter for How They Raise Revenue?," Marketing Science, INFORMS, vol. 28(6), pages 1112-1128, 11-12.
- Germa Bel & Joan Calzada, 2007. "Access Pricing to a Digital Broadcasting Platform," Journal of Media Economics, Taylor & Francis Journals, vol. 20(1), pages 29-53.
- Gregory S. Crawford & Ali Yurukoglu, 2012.
"The Welfare Effects of Bundling in Multichannel Television Markets,"
American Economic Review,
American Economic Association, vol. 102(2), pages 643-685, April.
- Crawford, Gregory S & Yurukoglu, Ali, 2011. "The Welfare Effects of Bundling in Multichannel Television Markets," CEPR Discussion Papers 8370, C.E.P.R. Discussion Papers.
- Hans Jarle Kind & Tore Nilssen & Lars Sørgard, 2006.
"Competition for Viewers and Advertisers in a TV Oligopoly,"
CESifo Working Paper Series
1862, CESifo Group Munich.
- Hans Jarle Kind & Tore Nilssen & Lars Sørgard, 2007. "Competition for Viewers and Advertisers in a TV Oligopoly," Journal of Media Economics, Taylor & Francis Journals, vol. 20(3), pages 211-233.
- Jean J. Gabszewicz & Didier Laussel & Nathalie Sonnac, 2004.
"Programming and Advertising Competition in the Broadcasting Industry,"
Journal of Economics & Management Strategy,
Wiley Blackwell, vol. 13(4), pages 657-669, December.
- GABSZEWICZ, Jean J. & LAUSSEL, Didier & SONNAC, Nathalie, "undated". "Programming and advertising competition in the broadcasting industry," CORE Discussion Papers RP 1873, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Weeds, Helen, 2012.
"TV Wars: Exclusive Content and Platform Competition in Pay TV,"
CEPR Discussion Papers
8781, C.E.P.R. Discussion Papers.
- Helen Weeds, 2016. "TV Wars: Exclusive Content and Platform Competition in Pay TV," Economic Journal, Royal Economic Society, vol. 126(594), pages 1600-1633, 08.
- Kenneth C. Wilbur, 2008. "A Two-Sided, Empirical Model of Television Advertising and Viewing Markets," Marketing Science, INFORMS, vol. 27(3), pages 356-378, 05-06.
- Armstrong, Mark, 1999. "Competition in the Pay-TV Market," Journal of the Japanese and International Economies, Elsevier, vol. 13(4), pages 257-280, December.
- Lal, Rajiv & Matutes, Carmen, 1994. "Retail Pricing and Advertising Strategies," The Journal of Business, University of Chicago Press, vol. 67(3), pages 345-370, July.
- Peitz, Martin & Valletti, Tommaso, 2004.
"Content and Advertising in the Media: Pay-TV versus Free-To-Air,"
CEPR Discussion Papers
4771, C.E.P.R. Discussion Papers.
- 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.
- Gregory Crawford, 2008. "The discriminatory incentives to bundle in the cable television industry," Quantitative Marketing and Economics (QME), Springer, vol. 6(1), pages 41-78, March.
- Andrei Hagiu & Robin S. Lee, 2011. "Exclusivity and Control," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 20(3), pages 679-708, 09.
When requesting a correction, please mention this item's handle: RePEc:ces:ceswps:_3885. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Klaus Wohlrabe)
If references are entirely missing, you can add them using this form.