Arbeitspapier

Two-Sided Markets with Pecuniary and Participation Externalities

The existing literature on two-sided markets addresses participation externalities, but so far it has neglected pecuniary externalities between competing platforms. In this paper we build a model that incorporates both externalities. In our setup differentiated platforms compete in advertising and offer consumers a service free of charge (such as a TV program) that is financed through advertising. We show that advertising can exhibit the properties of a strategic substitute or complement. Surprisingly, there exist cases in which platforms benefit from market entry. Moreover, we show that from a welfare point of view perfect competition is not always desirable.

Language
Englisch

Bibliographic citation
Series: SFB/TR 15 Discussion Paper ; No. 133

Classification
Wirtschaft
Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection
Oligopoly and Other Imperfect Markets
Entertainment; Media
Subject
two-sided markets
broadcasting
advertising
market entry
digital television

Event
Geistige Schöpfung
(who)
Schmidtke, Richard
Event
Veröffentlichung
(who)
Sonderforschungsbereich/Transregio 15 - Governance and the Efficiency of Economic Systems (GESY)
(where)
München
(when)
2006

DOI
doi:10.5282/ubm/epub.13418
Handle
URN
urn:nbn:de:bvb:19-epub-13418-1
Last update
10.03.2025, 11:42 AM CET

Data provider

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Object type

  • Arbeitspapier

Associated

  • Schmidtke, Richard
  • Sonderforschungsbereich/Transregio 15 - Governance and the Efficiency of Economic Systems (GESY)

Time of origin

  • 2006

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