Either or Both Competition: A 'Two-Sided' Theory of Advertising with Overlapping Viewerships

43 Pages Posted: 7 Jun 2014 Last revised: 11 Mar 2015

See all articles by Attila Ambrus

Attila Ambrus

Duke University - Department of Economics

Emilio Calvano

University of Bologna - Department of Economics; University of Toulouse 1 - Department of Economics; CSEF - Center for Studies in Economics and Finance

Markus Reisinger

Frankfurt School of Finance & Management - Economics Department; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: September 1, 2014

Abstract

In media markets, consumers spread their attention to several outlets, increasingly so as consumption migrates online. The traditional framework for studying competition among media outlets rules out this behavior by assumption. We propose a new model that allows consumers to choose multiple outlets and use it to study the effect of strategic interaction on advertising levels, and the impact of entry and mergers. We show that novel forces come into play, which reflect the outlets' incentives to control the composition of the customer base in addition to its size. We link consumer preferences and advertising technologies to market outcomes. The model can explain a number of empirical regularities that are difficult to reconcile with existing models.

Keywords: Media Competition, Two-Sided Markets, Multi-Homing, Viewer Composition, Viewer Preference Correlation

JEL Classification: D43, L13, L82, M37

Suggested Citation

Ambrus, Attila and Calvano, Emilio and Reisinger, Markus, Either or Both Competition: A 'Two-Sided' Theory of Advertising with Overlapping Viewerships (September 1, 2014). Economic Research Initiatives at Duke (ERID) Working Paper No. 170. Available at SSRN: https://ssrn.com/abstract=2446867 or http://dx.doi.org/10.2139/ssrn.2446867

Attila Ambrus (Contact Author)

Duke University - Department of Economics ( email )

100 Fuqua Drive
Durham, NC 27708-0204
United States

Emilio Calvano

University of Bologna - Department of Economics ( email )

Bologna
Italy

University of Toulouse 1 - Department of Economics ( email )

Place Anatole-France
Toulouse Cedex, F-31042
France

CSEF - Center for Studies in Economics and Finance ( email )

Via Cintia
Complesso Monte S. Angelo
Naples, Naples 80126
Italy

Markus Reisinger

Frankfurt School of Finance & Management - Economics Department ( email )

Sonnemannstra├če 9-11
Frankfurt am Main, 60314
Germany

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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