The importance of consumer multi-homing (joint purchases) for market performance: mergers and entry in media markets

Simon Anderson, Øystein Foros and Hans Jarle Kind

No 13022, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Consumer "multi-homing" (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 multi-homing and advertising-finance into the classic circle model of product differentiation. When consumers multi-home (attend more than one platform), media platforms can charge only incremental-value prices to advertisers. Entry or merger leaves consumer prices unchanged under consumer multi-homing, but leaves advertiser prices unchanged under single-homing: multi-homing flips the side of the market on which platforms compete. In contrast to standard circle results, equilibrium product variety can be insufficient under multi-homing.

Keywords: Media platforms; Circle model; Equilibrium product variety; Multi-homing (search for similar items in EconPapers)
Date: 2018-06
New Economics Papers: this item is included in nep-com, nep-cul and nep-mic
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Citations: View citations in EconPapers (3)

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Journal Article: The importance of consumer multihoming (joint purchases) for market performance: Mergers and entry in media markets (2019)
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