Mixing Media with Two-Part Tariffs

21 Pages Posted: 17 Apr 2006

See all articles by Tommaso M. Valletti

Tommaso M. Valletti

Imperial College Business School; Centre for Economic Policy Research (CEPR)

Steffen Hoernig

Nova School of Business and Economics

Date Written: January 2006

Abstract

We consider a media market where consumers mix content offered by different firms and firms charge two-part tariffs. As compared to pure linear pricing (pay-per-view), firms make higher profits, while consumers are worse off and the allocation is not first-best. We also consider flat subscription fees and show that they make mixing unattractive. Both two-part tariffs and pay-per-view Pareto-dominate flat fees.

Keywords: Two-part tariffs, pay-per-view, flat fees, combinable products

JEL Classification: L13, L82

Suggested Citation

Valletti, Tommaso M. and Hoernig, Steffen, Mixing Media with Two-Part Tariffs (January 2006). CEPR Discussion Paper No. 5437. Available at SSRN: https://ssrn.com/abstract=897353

Tommaso M. Valletti (Contact Author)

Imperial College Business School ( email )

South Kensington Campus
Exhibition Road
London SW7 2AZ, SW7 2AZ
United Kingdom

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Steffen Hoernig

Nova School of Business and Economics ( email )

Universidade Nova de Lisboa
Campus de Campolide
Lisboa, 1099-032
Portugal
+351-213801600 (Phone)

HOME PAGE: http://docentes.fe.unl.pt/~shoernig/

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