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Multihoming and market expansion: Effects on media platforms’ pricing and content creation incentives

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  • Dyskeland, Ole Kristian
  • Foros, Øystein

Abstract

Conventional assumptions in the classical linear city of Hotelling, the workhorse model in media economics, are (i) that no consumer buys more than one of the goods (they are singlehomers) and (ii) that the market is covered. We relax both assumptions to analyze how exclusive and non-exclusive content affect pricing and profit for media platforms. In contrast to the outcome in a covered market with consumer multihoming, we show that the consumer price in an uncovered market depends on both exclusive and non-exclusive content. If advertisers have a high willingness to pay for exclusive eyeballs, platforms prefer to provide non-exclusive rather than exclusive content.

Suggested Citation

  • Dyskeland, Ole Kristian & Foros, Øystein, 2023. "Multihoming and market expansion: Effects on media platforms’ pricing and content creation incentives," Economics Letters, Elsevier, vol. 232(C).
    • Handle: RePEc:eee:ecolet:v:232:y:2023:i:c:s016517652300352x
    DOI: 10.1016/j.econlet.2023.111327
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    References listed on IDEAS

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    Cited by:

    1. Tsuyoshi Toshimitsu, 2024. "Price and Quantity Competition in a Hotelling Linear Market Model with Network Connectivity," Discussion Paper Series 283, School of Economics, Kwansei Gakuin University.

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