Media See-Saws: Winners and Losers in Platform Markets
57 Pages Posted: 15 Aug 2017
Date Written: August 2017
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
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