Estimation of the indirect network effect: On the example of television advertising

Veronika Khlyupina ()
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Veronika Khlyupina: HSE University, Nizhnii Novgorod, Russia

Applied Econometrics, 2024, vol. 73, 102-118

Abstract: The platform is an intermediary between groups of users whose direct interaction without the platform would be difficult or not possible at all. A distinctive feature of platform markets is the presence of indirect network effects, which consist of the fact that the demand of one group of users for platform services affects the demand of another group of users. In the presence of multidirectional indirect network effects, an important platform’s business decision is to determine the optimal volume of services that create negative network effects, since after a certain amount of them, the company starts to lose users on the other side of the platform. In order for the business model to be successful and profitable, the platform should take this relationship into account. This study makes a quantitative assessment of indirect network effects with the use of data on Russian TV channels. A statistically significant positive audience effect and negative advertising effect are obtained.

Keywords: non-transactional platform; audience platform; indirect network effects; television market; advertising; Russia. (search for similar items in EconPapers)
JEL-codes: L10 L40 L51 L82 (search for similar items in EconPapers)
Date: 2024
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