Media competition with endogenous multi-homing

Type/nr A06/22
Skrevet av Simon P. Anderson, Øystein Foros and Hans Jarle Kind
Standard media economics models assume that consumers single-home (they patronize a single platform), but nowadays multi-homing is rife. We allow both consumers and advertisers to multi-home, with extended horizontal and vertical differentiation models for each side. Consumers only single-home in equilibrium if competition for consumers is weak. If it is strong enough, all consumers will multi-home and all advertisers single-home. Otherwise, even symmetric platforms may differentiate vertically by choosing different advertising levels, leading to partial (incomplete) multi-homing on both sides. Then advertising prices and platform profits may increase with the consumer disutility for ads because the number of single-homing consumers rises. Because platforms have monopoly power over delivering single-homing consumers in the advertising market, these consumers are more valuable than those who multi-home.
Språk Skrevet på engelsk