Scandinavian Working Papers in Economics

Memorandum,
Oslo University, Department of Economics

No 18/2010: Price Coordination in Two-Sided Markets: Competition in the TV Industry

Hans Jarle Kind (), Tore Nilssen () and Lars Sørgard ()
Additional contact information
Hans Jarle Kind: NHH
Tore Nilssen: Dept. of Economics, University of Oslo, Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway
Lars Sørgard: NHH

Abstract: Under the current market structure in the TV industry advertising prices are typically set by TV channels while viewer prices are set by distributors (e.g., cable operators). The latter implies that the distributors partly internalize the competition between the TV channels, since they take into account the fact that a lower viewer price at one channel will reduce the willingness to pay for rival channels. We …find that a shift to a market structure where advertising prices as well as viewer prices are set competitively by the TV channels might increase joint industry pro…ts. The reason is that this market structure, in contrast to the one we observe today, directly addresses the two-sidedness of the market. We also show that this is to the bene…t of the viewers.

Keywords: Two-sided markets; advertising; media economics

JEL-codes: L13; L22; L82

25 pages, November 22, 2010

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Published as
Hans Jarle Kind, Tore Nilssen and Lars Sørgard, (2016), 'Inter-Firm Price Coordination in a Two-Sided Market', International Journal of Industrial Organization, vol 44, pages 101-112

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