ADVERTISING, COMPETITION AND ENTRY IN MEDIA INDUSTRIES*

Claude Crampes · Carole Haritchabalet · Bruno Jullien

150 citations0/0 files storedJournal of Industrial Economics

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Merger and Competition Analysis Consumer Market Behavior and Pricing Digital Platforms and Economics

Abstract

This paper presents a model of media competition with free entry when media platforms are financed both from advertising receipts and customers' subscriptions. We establish a relationship between the equilibrium levels of prices, advertising and entry, the welfare maximizing levels and the advertising technology. Under constant or increasing returns to scale in the audience size, we find an excessive level of entry and an insufficient level of advertising. We then extend the analysis along several dimensions: the price as a strategic variable on the market for advertising, free media platforms and the media quality dimension.

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References

1988The Theory of Industrial Organization 2003Platform Competition in Two-Sided Markets 2006Competition in two-sided markets 1979Monopolistic Competition with Outside Goods 2003Chicken & Egg: Competition among Intermediation Service Providers 2007Risk Ownership in Contract Manufacturing 2005Market Provision of Broadcasting: A Welfare Analysis 2001Competitive Price Discrimination

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2016Either or Both Competition: A “Two-Sided” Theory of Advertising with Overlapping Viewerships 2009Mergers in Two‐Sided Markets: An Application to the Canadian Newspaper Industry 2012Regulating Advertising in the Presence of Public Service Broadcasting 2011Semi-collusion in media markets 2011Platform Siphoning: Ad-Avoidance and Media Content 2011Technology Licensing by Advertising Supported Media Platforms: An Application to Internet Search Engines

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