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Market Shares in Two-Sided Media IndustriesHans Jarle KindNorwegian School of Economics & Business Administration (NHH); CESifo (Center for Economic Studies and Ifo Institute for Economic Research); Norwegian School of Economics (NHH) - Department of Economics Frank StählerUniversity of Tuebingen - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute for Economic Research); University of Adelaide - School of Economics July 1, 2009 CESifo Working Paper Series No. 2737 Abstract: This paper generalizes the frequently used Hotelling model for two-sided markets in order to determine the equilibrium market shares. We show that advertisement levels depend neither 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. If the distribution of consumers is asymmetric, market shares will be asymmetric as well, and the media firm with the larger market share charges the higher media price. The larger firm makes a higher profit per reader and in aggregate compared to its smaller rival.
Number of Pages in PDF File: 13 Keywords: hotelling, general density function, media, location JEL Classification: D43 working papers seriesDate posted: August 6, 2009Suggested CitationContact Information
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