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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
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    References listed on IDEAS

    as
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    5. Jean‐Charles Rochet & Jean Tirole, 2006. "Two‐sided markets: a progress report," RAND Journal of Economics, RAND Corporation, vol. 37(3), pages 645-667, September.
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    7. Jean J. Gabszewicz & Didier Laussel & Nathalie Sonnac, 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, July.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Hotelling; general density function; media; location;
    All these keywords.

    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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