Paying to Remove Advertisements

Arbeitspapier

Media firms sometimes allow consumers to pay to remove advertisements from an advertisement-based product. We formally examine an ad-based monopolist's incentives to introduce this option. When deciding whether to introduce the option to pay, the monopolist compares the potential direct revenues from consumers with lost advertising revenues from not intermediating those consumers to advertisers. If the option is introduced, the media firm increases advertising quantity to make the option to pay more attractive. This hurts consumers, but benefits the media firm and advertisers. Total welfare may increase or decrease. Perhaps surprisingly, more annoying advertisements may lead to an increase in advertising quantity.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IFN Working Paper ; No. 789

Classification and Topics

• Classification: Wirtschaft ; Market Structure, Pricing, and Design: Monopoly ; Information and Product Quality; Standardization and Compatibility ; Regulation and Industrial Policy: Other ; Advertising
• Subject: Advertising ; Damaged goods ; Media markets ; Price discrimination ; Two-sided markets ; Vertical differentiation ; Online-Marketing ; Preisdifferenzierung ; Marktstruktur ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Tåg, Joacim
• Event: Veröffentlichung
• (who): Research Institute of Industrial Economics (IFN)
• (where): Stockholm
• (when): 2009

Further information

• Handle: http://hdl.handle.net/10419/81535
• Last update: 10.03.2025, 11:42 AM CET