IDEAS home Printed from https://ideas.repec.org/p/hhs/iuiwop/0789.html

Paying to Remove Advertisements

Author

Listed:
  • Tåg, Joacim

    (Research Institute of Industrial Economics (IFN))

Abstract

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.

Suggested Citation

  • Tåg, Joacim, 2009. "Paying to Remove Advertisements," Working Paper Series 789, Research Institute of Industrial Economics.
    • Handle: RePEc:hhs:iuiwop:0789
    as

    Download full text from publisher

    File URL: https://www.ifn.se/wfiles/wp/wp789.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jhih-Hua Jhang-Li & Jyh-Hwa Liou, 2024. "An analysis of operating strategy for a video live streaming platform: advertisement, advertorial, and donation," Information Technology and Management, Springer, vol. 25(1), pages 51-68, March.
    2. Simon P. Anderson & Joshua S. Gans, 2011. "Platform Siphoning: Ad-Avoidance and Media Content," American Economic Journal: Microeconomics, American Economic Association, vol. 3(4), pages 1-34, November.
    3. Appel, Gil & Libai, Barak & Muller, Eitan & Shachar, Ron, 2020. "On the monetization of mobile apps," International Journal of Research in Marketing, Elsevier, vol. 37(1), pages 93-107.
    4. Just, Natascha, 2018. "Governing online platforms: Competition policy in times of platformization," Telecommunications Policy, Elsevier, vol. 42(5), pages 386-394.
    5. Li, Jingyan & Wu, Jie & Zhang, Juzhi & Ji, Xiang, 2024. "Freemium design: Optimal tier differentiation models for content platforms," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 188(C).
    6. Zennyo, Yusuke, 2020. "Freemium competition among ad-sponsored platforms," Information Economics and Policy, Elsevier, vol. 50(C).
    7. Dietl, Helmut & Lang, Markus & Lin, Panlang, 2013. "Advertising pricing models in media markets: Lump-sum versus per-consumer charges," Information Economics and Policy, Elsevier, vol. 25(4), pages 257-271.
    8. Peipei Li & Shue Mei & Weijun Zhong, 2023. "Fee or subsidy? Pricing strategies for digital content platforms with different content and advertising," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(8), pages 4482-4506, December.
    9. Li, Xin & Balasubramanian, Hari & Chen, Yan & Pang, Chuan, 2024. "Managing conflicting revenue streams from advertisers and subscribers for online platforms," European Journal of Operational Research, Elsevier, vol. 314(1), pages 241-254.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • L59 - Industrial Organization - - Regulation and Industrial Policy - - - Other
    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hhs:iuiwop:0789. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Elisabeth Gustafsson (email available below). General contact details of provider: https://edirc.repec.org/data/iuiiise.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.