DP5437 Mixing Media with Two-Part Tariffs
|Author(s):||Steffen Hoernig, Tommaso Valletti|
|Publication Date:||January 2006|
|Keyword(s):||combinable products, flat fees, pay-per-view, two-part tariffs|
|Programme Areas:||Industrial Organization|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=5437|
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.