Discussion Paper Details

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Title: Media See-saws: Winners and Losers in Platform Markets

Author(s): Simon P Anderson and Martin Peitz

Publication Date: August 2017

Keyword(s): advertising, Aggregative games, Entry, Media economics and mergers

Programme Area(s): Industrial Organization

Abstract: 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.

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Bibliographic Reference

Anderson, S and Peitz, M. 2017. 'Media See-saws: Winners and Losers in Platform Markets'. London, Centre for Economic Policy Research.