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Paying to Remove Advertisements

  • Tåg, Joacim


    (Research Institute of Industrial Economics (IFN))

Media firms sometimes allow consumers to pay to remove advertisements from an advertisement-based product. We formally examine an ad-based monopolist's incentives to introduce this option. When deciding whether to introduce the option to pay, the monopolist compares the potential direct revenues from consumers with lost advertising revenues from not intermediating those consumers to advertisers. If the option is introduced, the media firm increases advertising quantity to make the option to pay more attractive. This hurts consumers, but benefits the media firm and advertisers. Total welfare may increase or decrease. Perhaps surprisingly, more annoying advertisements may lead to an increase in advertising quantity.

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Paper provided by Research Institute of Industrial Economics in its series Working Paper Series with number 789.

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Length: 15 pages
Date of creation: 13 Feb 2009
Date of revision:
Publication status: Published in Information Economics and Policy, 2009, pages 245-252.
Handle: RePEc:hhs:iuiwop:0789
Contact details of provider: Postal: Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden
Phone: +46 8 665 4500
Fax: +46 8 665 4599
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