The importance of consumer multihoming (joint purchases) for market performance: Mergers and entry in media markets

Consumer “multihoming” (watching two TV channels, or buying two news magazines) has surprisingly important effects on market equilibrium and performance in (two‐sided) media markets. We show this by introducing consumer multihoming and advertising finance into the classic circle model of product dif...

Full description

Saved in:
Bibliographic Details
Published in:Journal of economics & management strategy 2019, Vol.28 (1), p.125-137
Main Authors: Anderson, Simon P., Foros, Øystein, Kind, Hans Jarle
Format: Article
Language:English
Subjects:
Advertising
Consumer behavior
Consumer prices
Consumers
Differentiation
Equilibrium
Finance
incremental value pricing
Market prices
Markets
Mass media
media market performance
Mergers
mergers and entry
multihoming consumers
News
optimal and equilibrium platform diversity
Prices
Product differentiation
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:Consumer “multihoming” (watching two TV channels, or buying two news magazines) has surprisingly important effects on market equilibrium and performance in (two‐sided) media markets. We show this by introducing consumer multihoming and advertising finance into the classic circle model of product differentiation. When consumers multihome (attend more than one platform), media platforms can charge only incremental value prices to advertisers. Entry or merger leaves consumer prices unchanged under consumer multihoming, but leaves advertiser prices unchanged under single‐homing: Multihoming flips the side of the market on which platforms compete. In contrast to standard circle results, equilibrium product variety can be insufficient under multihoming.
ISSN:1058-6407
1530-9134
DOI:10.1111/jems.12300