Friday, September 25, 2009

Market Shares in Two-Sided Media Industries

Posted by D. Daniel Sokol

Hans Jarle Kind, Norwegian School of Economics & Business Administration (NHH), and Frank Stähler, University of Otago - Department of Economics explain Market Shares in Two-Sided Media Industries.

ABSTRACT: This paper generalizes the frequently used Hotelling model for two-sided markets in order to determine the equilibrium market shares. We show that advertisement levels depend neither on the media price nor on the location of the media firm. An increase in advertising revenues does not change location but only the media price. If the distribution of consumers is asymmetric, market shares will be asymmetric as well, and the media firm with the larger market share charges the higher media price. The larger firm makes a higher profit per reader and in aggregate compared to its smaller rival.

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