artículo
Intermarket network externalities and competition: An application to the media industry
Fecha
2008Registro en:
10.1111/j.1742-7363.2008.00084.x
1742-7355
WOS:000262000300001
Autor
Ferrando, Jorge
Gabszewicz, Jean J.
Laussel, Didier
Sonnac, Nathalie
Institución
Resumen
Intermarket network externalities occur when the utility of a good produced in a given industry varies with the size of the demand for a good produced in another. A particularly significant example of this phenomenon is provided by the interaction between the media and advertising industries. Media consumers vary according to their willingness to pay for a media good, which depends on the advertising volume. In the advertising market, advertisers vary according to their willingness to pay for an advertisement, which also depends positively on the audience reached. We model a situation of competition between two content providers who are rivals in both the media and advertising industries, choosing simultaneously the newspaper prices and the advertising rates. We characterize the equilibria of the game and explore how they depend on audience attitudes towards advertising. Our main finding is that two-sided interactions may induce exit by one of the media companies from either only the advertising market or both markets.