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Another Tale of Two-Sided markets

Author

Listed:
  • Hans Jarle Kind

    (Norwegian School of Economics and Business Administration, Bergen, Norway)

  • Frank Staehler

    (Department of Economics, University of Otago)

Abstract

This note generalizes the frequently used Hotelling model for two-sided markets. We demonstrate an invariance theorem: advertisement levels neither depend on the media price nor on the location of the media firm. An increase in advertising revenues does not change location but only the media price. In conclusion, a Hotelling model of two-sided markets is equivalent to one of one-sided markets.

Suggested Citation

  • Hans Jarle Kind & Frank Staehler, 2007. "Another Tale of Two-Sided markets," Working Papers 0708, University of Otago, Department of Economics, revised Jun 2007.
    • Handle: RePEc:otg:wpaper:0708
    as

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    File URL: http://www.business.otago.ac.nz/econ/research/discussionpapers/DP_0708.pdf
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    References listed on IDEAS

    as
    1. Jean‐Charles Rochet & Jean Tirole, 2006. "Two‐sided markets: a progress report," RAND Journal of Economics, RAND Corporation, vol. 37(3), pages 645-667, September.
    2. Claude Crampes & Carole Haritchabalet & Bruno Jullien, 2009. "Advertising, Competition And Entry In Media Industries," Journal of Industrial Economics, Wiley Blackwell, vol. 57(1), pages 7-31, March.
    3. Peitz, Martin & Valletti, Tommaso M., 2008. "Content and advertising in the media: Pay-tv versus free-to-air," International Journal of Industrial Organization, Elsevier, vol. 26(4), pages 949-965, July.
    4. Jean J. Gabszewicz & Didier Laussel & Nathalie Sonnac, 2002. "Press Advertising and the Political Differentiation of Newspapers," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 4(3), pages 317-334, July.
    5. Jean-Charles Rochet & Jean Tirole, 2003. "Platform Competition in Two-Sided Markets," Journal of the European Economic Association, MIT Press, vol. 1(4), pages 990-1029, June.
    6. Anderson, Simon P. & Goeree, Jacob K. & Ramer, Roald, 1997. "Location, Location, Location," Journal of Economic Theory, Elsevier, vol. 77(1), pages 102-127, November.
    7. Simon P. Anderson & Stephen Coate, 2005. "Market Provision of Broadcasting: A Welfare Analysis," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 72(4), pages 947-972.
    8. GABSZEWICZ, Jean J. & LAUSSEL, Didier & SONNAC, Nathalie, 2000. "Does press advertising foster the “pensée unique”?," LIDAM Discussion Papers CORE 2000008, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    9. Nathalie Sonnac, 2000. "Readers' Attitudes Toward Press Advertising: Are They Ad-Lovers or Ad-Averse?," Journal of Media Economics, Taylor & Francis Journals, vol. 13(4), pages 249-259.
    10. Jean-Charles Rochet Author-Email:rochet@cict.fr Author-Workplace-Name: IDEI, University of Toulouse & Jean Tirole Author-Email: tirole@cict.fr Author-Workplace-Name: IDEI, University of Toulouse, 2006. "Two-Sided Markets: A Progress Report," RAND Journal of Economics, The RAND Corporation, vol. 37(3), pages 645-667, Autumn.
    11. repec:bla:jpbect:v:4:y:2002:i:3:p:317-34 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Hotelling; general density function; media; location;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media

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