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Market Segmentation in Two-Sided Markets: TV Rights for Premier League

Author

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  • Hans Jarle Kind
  • Lars Sørgard

Abstract

This paper analyzes market segmentation in a two-sided market that consists of media consumers and advertisers. The analysis is motivated by a European Court of Justice Decision in October 2011, which allowed viewers to take advantage of international price differences and buy access to Premier League TV matches from whichever country they like. We compare complete market segmentation with the new situation where consumers can purchase from abroad (allowing for passive sales). Clearly, such a change is likely to harm Premier League, which at present is sold at different prices to viewers in different countries. More surprisingly, we find that all viewers – including those that switch to purchasing from abroad - might also be harmed. We further show that the two-sidedness of the market may break down in the country that attracts foreign viewers.

Suggested Citation

  • Hans Jarle Kind & Lars Sørgard, 2013. "Market Segmentation in Two-Sided Markets: TV Rights for Premier League," CESifo Working Paper Series 4060, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_4060
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    File URL: http://www.cesifo-group.de/DocDL/cesifo1_wp4060.pdf
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    References listed on IDEAS

    as
    1. E. Glen Weyl, 2010. "A Price Theory of Multi-sided Platforms," American Economic Review, American Economic Association, vol. 100(4), pages 1642-1672, September.
    2. Qihong Liu & Konstantinos Serfes, 2013. "Price Discrimination in Two-Sided Markets," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 22(4), pages 768-786, December.
    3. Varian, Hal R, 1985. "Price Discrimination and Social Welfare," American Economic Review, American Economic Association, vol. 75(4), pages 870-875, September.
    4. Jeon, Doh-Shin & Jullien, Bruno & Klimenko, Mikhail M., 2012. "Language, Internet and Platform Competition: the case of Search Engine," CEPR Discussion Papers 9144, C.E.P.R. Discussion Papers.
    5. Jean-Charles Rochet & Jean Tirole, 2014. "Platform Competition in Two-Sided Markets," CPI Journal, Competition Policy International, vol. 10.
    6. Caillaud, Bernard & Jullien, Bruno, 2003. " Chicken & Egg: Competition among Intermediation Service Providers," RAND Journal of Economics, The RAND Corporation, vol. 34(2), pages 309-328, Summer.
    7. 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.
    8. 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.
    9. Jeon, Doh-Shin & Jullien, Bruno & Klimenko, Mikhail, 2012. "Language, Internet and Platform Competition," TSE Working Papers 12-336, Toulouse School of Economics (TSE), revised Feb 2017.
    10. Barros Pedro P & Kind Hans Jarle & Nilssen Tore & Sørgard Lars, 2005. "Media Competition on the Internet," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 4(1), pages 1-20, January.
    11. 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.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    market segmentation; two-sided market; price discrimination; media market; passive sales;

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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