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Price Coordination in Two-Sided Markets: Competition in the TV Industry

Author

Listed:
  • Jarle Kind, Hans

    (NHH)

  • Nilssen, Tore

    (Dept. of Economics, University of Oslo)

  • Sørgard, Lars

    (NHH)

Abstract

Under the current market structure in the TV industry advertising prices are typically set by TV channels while viewer prices are set by distributors (e.g., cable operators). The latter implies that the distributors partly internalize the competition between the TV channels, since they take into account the fact that a lower viewer price at one channel will reduce the willingness to pay for rival channels. We …find that a shift to a market structure where advertising prices as well as viewer prices are set competitively by the TV channels might increase joint industry pro…ts. The reason is that this market structure, in contrast to the one we observe today, directly addresses the two-sidedness of the market. We also show that this is to the bene…t of the viewers.

Suggested Citation

  • Jarle Kind, Hans & Nilssen, Tore & Sørgard, Lars, 2010. "Price Coordination in Two-Sided Markets: Competition in the TV Industry," Memorandum 18/2010, Oslo University, Department of Economics.
  • Handle: RePEc:hhs:osloec:2010_018
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    File URL: https://www.sv.uio.no/econ/english/research/unpublished-works/working-papers/pdf-files/2010/Memo-18-2010.pdf
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    References listed on IDEAS

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    Cited by:

    1. Ballon, Pieter & Bleyen, Valérie-Anne & Donders, Karen & Lindmark, Sven, 2012. "The double "layered" platform structure of the audiovisual media industry: A case study of Flanders," 23rd European Regional ITS Conference, Vienna 2012 60344, International Telecommunications Society (ITS).
    2. Harald Nygard Bergh & Hans Jarle Kind & Bjørn-Atle Reme & Lars Sørgard, 2012. "Competition between Content Distributors in Two-Sided Markets," CESifo Working Paper Series 3885, CESifo.
    3. Evens, Tom, 2014. "Clash of TV platforms: How broadcasters and distributors build platform leadership," 25th European Regional ITS Conference, Brussels 2014 101429, International Telecommunications Society (ITS).

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    More about this item

    Keywords

    Two-sided markets; advertising; media economics;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media

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