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Discriminatory Pricing and Spatial Competition in Two-Sided Media Markets

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  • Kodera Toshiki

    (Faculty of Management and Economics, Aomori Public University)

Abstract

This study describes a spatial model of price discrimination in two-sided media markets. Given that media platforms offer a uniform price for consumers and either a uniform or discriminatory price for advertisers, we compare a platform’s profit and welfare under these two different pricing schemes. In contrast to the well-known result that price discrimination based on a consumer’s location leads to lower profits, if consumers have a strong aversion to advertising, we show that a platform’s profit is better off under price discrimination. In addition, if consumers rather dislike advertising, we show that price discrimination is detrimental to both a platform’s profit and the consumer’s welfare.

Suggested Citation

  • Kodera Toshiki, 2015. "Discriminatory Pricing and Spatial Competition in Two-Sided Media Markets," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 15(2), pages 891-926, April.
    • Handle: RePEc:bpj:bejeap:v:15:y:2015:i:2:p:891-926:n:3
    DOI: 10.1515/bejeap-2013-0178
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