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Competition in the media and advertising markets

Author

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  • GABSZEWICZ, Jean J.
  • LAUSSEL, Didier
  • SONNAC, Nathalie

Abstract

We examine how media competition is affected when making endogenous advertising rates. To this end, we revisit some well‐known contributions in which advertising rates and volumes are viewed as exogenous, so that the effects of advertising on diversity and industry concentration only depend on the size of the audience, without taking into account how the media audience depends itself on advertising rates. We rely on the two‐sided market structure which characterizes the media and advertising industry and allows advertising rates and audience size to be jointly determined at equilibrium. Finally, we study how making the advertising rate dependent on the audience size may influence the content and diversity of the media industry.
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Suggested Citation

  • GABSZEWICZ, Jean J. & LAUSSEL, Didier & SONNAC, Nathalie, 2006. "Competition in the media and advertising markets," LIDAM Reprints CORE 1872, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvrp:1872
    Note: In : The Manchester School, 74(1), 1-22, 2006
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    Cited by:

    1. Anderson, Simon P. & Gabszewicz, Jean J., 2006. "The Media and Advertising: A Tale of Two-Sided Markets," Handbook of the Economics of Art and Culture, in: V.A. Ginsburgh & D. Throsby (ed.), Handbook of the Economics of Art and Culture, edition 1, volume 1, chapter 18, pages 567-614, Elsevier.
    2. Hagiu, Andrei & Jullien, Bruno, 2014. "Search diversion and platform competition," International Journal of Industrial Organization, Elsevier, vol. 33(C), pages 48-60.
    3. Ramon Casadesus-Masanell & Feng Zhu, 2010. "Strategies to Fight Ad-Sponsored Rivals," Management Science, INFORMS, vol. 56(9), pages 1484-1499, September.
    4. Feng Zhu, 2008. "Ad-sponsored Business Models and Compatibility Incentives of Social Networks," Working Papers 08-20, NET Institute, revised Sep 2008.
    5. Budzinski, Oliver & Lindstädt-Dreusicke, Nadine, 2018. "The new media economics of video-on-demand markets: Lessons for competition policy," Ilmenau Economics Discussion Papers 116, Ilmenau University of Technology, Institute of Economics.
    6. Garcia Pires, Armando J., 2014. "Media diversity, advertising, and adaptation of news to readers’ political preferences," Information Economics and Policy, Elsevier, vol. 28(C), pages 28-38.
    7. Shengli Li & Qiuyue Luo & Liangfei Qiu & Subhajyoti Bandyopadhyay, 2020. "Optimal Pricing Model of Digital Music: Subscription, Ownership or Mixed?," Production and Operations Management, Production and Operations Management Society, vol. 29(3), pages 688-704, March.
    8. Jullien, Bruno & Hagiu, Andrei, 2013. "Strategic Search Diversion, Product Affiliation and Platform Competition," CEPR Discussion Papers 9451, C.E.P.R. Discussion Papers.
    9. Monic Sun & Feng Zhu, 2011. "Ad Revenue and Content Commercialization: Evidence from Blogs," Working Papers 11-32, NET Institute.
    10. Robert Seamans & Feng Zhu, 2014. "Responses to Entry in Multi-Sided Markets: The Impact of Craigslist on Local Newspapers," Management Science, INFORMS, vol. 60(2), pages 476-493, February.
    11. Enrico Böhme & Christopher Müller, 2013. "Price-Increasing Competition on Two-Sided Markets with Homogeneous Platforms," Journal of Industry, Competition and Trade, Springer, vol. 13(4), pages 453-479, December.
    12. Budzinski, Oliver & Lindstädt-Dreusicke, Nadine, 2019. "The new media economics of video-on-demand markets: Lessons for competition policy (updated version)," Ilmenau Economics Discussion Papers 125, Ilmenau University of Technology, Institute of Economics.
    13. Ramon Casadesus-Masanell & Feng Zhu, 2009. "Strategies to Fight Ad-sponsored Rivals," Working Papers 09-09, NET Institute, revised Sep 2009.
    14. Monic Sun & Feng Zhu, 2013. "Ad Revenue and Content Commercialization: Evidence from Blogs," Management Science, INFORMS, vol. 59(10), pages 2314-2331, October.
    15. Armando J. Garcia Pires, 2017. "Media pluralism and competition," European Journal of Law and Economics, Springer, vol. 43(2), pages 255-283, April.
    16. Robert Seamans & Feng Zhu, 2017. "Repositioning and Cost-Cutting: The Impact of Competition on Platform Strategies," Strategy Science, INFORMS, vol. 2(2), pages 83-99, June.
    17. Armando J. Garcia Pires, 2021. "Net neutrality and content provision," Manchester School, University of Manchester, vol. 89(6), pages 569-593, December.

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