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Media See-Saws: Winners and Losers in Platform Markets

57 Pages Posted: 15 Aug 2017  

Simon P. Anderson

University of Virginia - Department of Economics

Martin Peitz

University of Mannheim - Department of Economics

Date Written: August 2017

Abstract

We customize the aggregative game approach to oligopoly to study media platforms which may differ by popularity. Advertiser, platform, and consumer surplus are tied together by a simple summary statistic. When media are ad-financed and ads are a nuisance to consumers we establish see-saws between consumers and advertisers. Entry increases consumer surplus, but decreases advertiser surplus if industry platform profits decrease with entry. Merger decreases consumer surplus, but advertiser surplus tends to increase. By contrast, when platforms use two-sided pricing or consumers like advertising, advertiser and consumer interests are often aligned.

Keywords: advertising, Aggregative games, Entry, Media economics, mergers

JEL Classification: D43, L13

Suggested Citation

Anderson, Simon P. and Peitz, Martin, Media See-Saws: Winners and Losers in Platform Markets (August 2017). CEPR Discussion Paper No. DP12214. Available at SSRN: https://ssrn.com/abstract=3018468

Simon Anderson (Contact Author)

University of Virginia - Department of Economics ( email )

P.O. Box 400182
Charlottesville, VA 22904-4182
United States
804-924-3861 (Phone)
804-982-2904 (Fax)

Martin Peitz

University of Mannheim - Department of Economics ( email )

D-68131 Mannheim
Germany
+49 621 181-1835 (Phone)

HOME PAGE: http://peitz.vwl.uni-mannheim.de/

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