Intermediaries in Two-Sided Markets: An Empirical Analysis of the U.S. Cable Television Industry

American Economic Journal: Microeconomics, 8 (1) 256-282, 2015

45 Pages Posted: 5 Mar 2016

See all articles by Andre Boik

Andre Boik

University of California, Davis - Department of Economics

Date Written: April 13, 2015

Abstract

Local television stations are platforms in a two-sided market connecting advertisers and viewers. This paper explicitly examines the effect that important intermediaries (such as cable, telephone, and satellite distributors) may have on a platform’s pricing behavior in a two-sided market. I find that stations raise their fees to cable distributors because stations prefer that viewers access their content through satellite distributors with whom they do not compete in the local advertising market, and that station mergers lower stations’ fees to distributors by partially internalizing a pricing externality that results from the mandatory bundling of local content.

Keywords: Two-sided markets, U.S. Cable Television

Suggested Citation

Boik, Andre, Intermediaries in Two-Sided Markets: An Empirical Analysis of the U.S. Cable Television Industry (April 13, 2015). American Economic Journal: Microeconomics, 8 (1) 256-282, 2015. Available at SSRN: https://ssrn.com/abstract=2741928

Andre Boik (Contact Author)

University of California, Davis - Department of Economics ( email )

One Shields Drive
Davis, CA 95616-8578
United States

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