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Another Tale of Two-Sided markets

Author

Listed:
  • Hans Jarle Kind

    () (Norwegian School of Economics and Business Administration, Bergen, Norway)

  • Frank Staehler

    () (Department of Economics, University of Otago)

Abstract

This note generalizes the frequently used Hotelling model for two-sided markets. We demonstrate an invariance theorem: advertisement levels neither depend on the media price nor on the location of the media firm. An increase in advertising revenues does not change location but only the media price. In conclusion, a Hotelling model of two-sided markets is equivalent to one of one-sided markets.

Suggested Citation

  • Hans Jarle Kind & Frank Staehler, 2007. "Another Tale of Two-Sided markets," Working Papers 0708, University of Otago, Department of Economics, revised Jun 2007.
  • Handle: RePEc:otg:wpaper:0708
    as

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    File URL: http://www.business.otago.ac.nz/econ/research/discussionpapers/DP_0708.pdf
    File Function: First version, 2007
    Download Restriction: no

    References listed on IDEAS

    as
    1. Jean-Charles Rochet & Jean Tirole, 2014. "Platform Competition in Two-Sided Markets," CPI Journal, Competition Policy International, vol. 10.
    2. Simon P. Anderson & Stephen Coate, 2005. "Market Provision of Broadcasting: A Welfare Analysis," Review of Economic Studies, Oxford University Press, vol. 72(4), pages 947-972.
    3. Peitz, Martin & Valletti, Tommaso M., 2008. "Content and advertising in the media: Pay-tv versus free-to-air," International Journal of Industrial Organization, Elsevier, vol. 26(4), pages 949-965, July.
    4. Nathalie Sonnac, 2000. "Readers’ Attitudes Toward Press Advertising : Are They Ad-Lovers or Ad-Averse ?," Working Papers 2000-28, Center for Research in Economics and Statistics.
    5. Gabszewicz, Jean J & Laussel, Didier & Sonnac, Nathalie, 2002. " Press Advertising and the Political Differentiation of Newspapers," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 4(3), pages 317-334.
    6. Claude Crampes & Carole Haritchabalet & Bruno Jullien, 2005. "Advertising, Competition and Entry in Media Industries," CESifo Working Paper Series 1591, CESifo Group Munich.
    7. GABSZEWICZ, Jean J. & LAUSSEL, Didier & SONNAC, Nathalie, 2000. "Does press advertising foster the “pensée unique”?," CORE Discussion Papers 2000008, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    8. repec:rje:randje:v:37:y:2006:3:p:645-667 is not listed on IDEAS
    9. Anderson, Simon P. & Goeree, Jacob K. & Ramer, Roald, 1997. "Location, Location, Location," Journal of Economic Theory, Elsevier, vol. 77(1), pages 102-127, November.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Hotelling; general density function; media; location;

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media

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