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

Simon Anderson, Øystein Foros and Hans Jarle Kind

Journal of Economics & Management Strategy, 2019, vol. 28, issue 1, 125-137

Abstract: 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.

Date: 2019
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Citations: View citations in EconPapers (19)

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https://doi.org/10.1111/jems.12300

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Working Paper: The importance of consumer multi-homing (joint purchases) for market performance: mergers and entry in media markets (2018)
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