Two-Sided Network E¤ects and Competition : An Application to Media Industries
نویسندگان
چکیده
Intermarket network externalities take place when the utility of a good produced in a given industry varies with the size of the demand for a good produced in another. A particularly signi...cant example of this phenomenon is provided by the interaction between the media and advertising industries. Media consumers vary according to their willingness to pay for the media good, which depends on the advertising volume. Advertisers vary according to their willingness to pay for an ad, which also depends on the audience reached. We model a situation of competition between two content providers who are rivals in both the media and advertising industries, choosing simultaneously the newspapers prices and the advertising rates. We characterise the equilibria of the game and explore how they depend on audience attitudes towards advertising. Our main ...nding is that two-sided interactions may induce exit by one of the media companies from either only the advertising market or both markets.
منابع مشابه
How do Switching Costs A¤ect Market Concentration and Prices in Network Industries?
I investigate the e¤ects of switching costs on the market outcome in network industries using a dynamic duopoly model of price competition in the presence of an outside option. I nd that the role of switching costs depends on network e¤ects and the outside option. Without a viable outside option, high switching costs can neutralize the tendency towards high market concentration associated with...
متن کاملPlatform Competition in Two-Sided Markets
Many if not most markets with network externalities are two-sided. To succeed, platforms in industries such as software, portals and media, payment systems and the Internet, must “get both sides of the market on board ”. Accordingly, platforms devote much attention to their business model, that is to how they court each side while making money overall. The paper builds a model of platform compe...
متن کاملCompetition in two-sided markets with common network externalities
We study competition in two sided markets with common network externality rather than with the standard inter-group e¤ects. This type of externality occurs when both groups bene t, possibly with di¤erent intensities, from an increase in the size of one group and from a decrease in the size of the other. We explain why common externality is relevant for the health and education sectors. We focus...
متن کاملOptimal Pricing and Quality of Academic Journals and the Ambiguous Welfare Effects of Forced Open Access: A Two-sided Model
We analyse optimal pricing and quality of a monopolistic journal and the optimality of open access in a two-sided model. The predominant aspect of the model that determines the quality levels at which open access is optimal is the nature of the (non-linear) externalities between readers and authors in a journal. We show that there exist scenarios in which open access is a feature of high-qualit...
متن کاملOn Endogenously Staggered Prices
Taylor's model of staggered contracts is an in uential explanation for nominal inertia and the persistent real e ects of nominal shocks. However, in standard imperfect competition models, if agents are allowed to choose the timing of pricing decisions, they will typically choose to synchronize. This paper provides a simple model of imperfect competition which produces stable staggering. Our arg...
متن کامل