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Media see-saws : winners and losers on media platforms

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  • Anderson, Simon P.
  • Peitz, Martin

Abstract

We customize the aggregative game approach to oligopoly to study asymmetric media markets. Advertiser, platform, and consumer surplus are tied together by a simple summary statistic. When media are ad-financed and ads are a nuisance to consumers we establish see-saws between consumers and advertisers. Entry of a lower-quality platform increases consumer surplus, but decreases advertiser surplus if industry platform profits decrease with entry. Merger decreases consumer surplus, but advertiser surplus increases when the profits of the higher-quality platform within the merger increase. By contrast, when platforms use two-sided pricing or consumers like advertising,advertiser and consumer interests are often aligned.

Suggested Citation

  • Anderson, Simon P. & Peitz, Martin, 2015. "Media see-saws : winners and losers on media platforms," Working Papers 15-16, University of Mannheim, Department of Economics.
  • Handle: RePEc:mnh:wpaper:39750
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    File URL: https://ub-madoc.bib.uni-mannheim.de/39750/1/Simon_P._Anderson_und_Martin_Peitz_15-16.pdf
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    References listed on IDEAS

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    1. Anderson, Simon P & de Palma, Andre, 2001. "Product Diversity in Asymmetric Oligopoly: Is the Quality of Consumer Goods Too Low?," Journal of Industrial Economics, Wiley Blackwell, vol. 49(2), pages 113-135, June.
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    6. Jean-Charles Rochet & Jean Tirole, 2014. "Platform Competition in Two-Sided Markets," CPI Journal, Competition Policy International, vol. 10.
    7. Peitz, Martin & Reisinger, Markus, 2014. "The Economics of Internet Media," Working Papers 14-23, University of Mannheim, Department of Economics.
    8. Ivaldi, Marc & Zhang, Jiekai, 2015. "Advertising Competition in the French Free-To-Air Television Broadcasting Industry," CEPR Discussion Papers 10762, C.E.P.R. Discussion Papers.
    9. Simon P. Anderson, Nisvan Erkal and, 2009. "Aggregative Oligopoly Games with Entry," Department of Economics - Working Papers Series 1175, The University of Melbourne, revised 2013.
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    Cited by:

    1. Massimo Motta & Emanuele Tarantino, 2017. "The effect of horizontal mergers, when firms compete in prices and investments," Economics Working Papers 1579, Department of Economics and Business, Universitat Pompeu Fabra.
    2. Charles Angelucci & Julia Cage, 2015. "Newspapers in Times of Low Advertising Revenues," Sciences Po publications info:hdl:2441/26t617gatp8, Sciences Po.
    3. Belleflamme, Paul & Peitz, Martin, 2016. "Platforms and network effects," Working Papers 16-14, University of Mannheim, Department of Economics.

    More about this item

    Keywords

    media economics ; mergers ; entry ; advertising ; aggregative games;

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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