Working Paper: CEPR ID: DP10608
Authors: Simon P. Anderson; Ystein Foros; Hans Jarle Kind
Abstract: Standard models of advertising-financed media assume consumers patronize a single media platform, precluding effective competition for advertisers. Such competition ensues if consumers multi-home. The principle of incremental pricing implies that multi-homing consumers are less valuable to platforms. Then entry of new platforms decreases ad prices, while a merger increases them, and ad-financed platforms may suffer if a public broadcaster carries ads. Platforms may bias content against multi-homing consumers, especially if consumers highly value overlapping content and/or second impressions have low value.
Keywords: Genre choice; Incremental ad pricing; Media bias; Media economics; Multi-homing; Overlap
JEL Codes: D11; D60; L13
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| multihoming (D85) | increased competition for advertisers (D49) |
| entry of new platforms (O36) | decrease in ad prices (D49) |
| merger between platforms (D26) | increase in ad prices (D49) |
| multihoming consumers (D16) | lower value to platforms (D46) |
| incremental pricing principle (D40) | affects pricing strategies (L11) |