Multi-Homing and Platform Strategies: Historical Evidence from the US Newspaper Industry
45 Pages Posted: 6 Oct 2017 Last revised: 11 Jan 2019
Date Written: December 1, 2018
We examine how heterogeneity in customers’ multi-homing tendencies affects a platform’s response to new entrants in its market. We develop a formal model to generate empirical predictions and then test them leveraging a historical setting: TV broadcast station entry into local newspaper markets from 1945–1963. We show that after a TV station enters the newspaper market, newspaper firms with more multi-homing consumers had higher subscription prices, circulation, and ad rates. These results suggest that heterogeneity in customer multi-homing is a significant factor that can moderate platforms’ competitive strategies.
Keywords: multi-homing, platform strategies, competition, newspapers, television
Suggested Citation: Suggested Citation