Discriminatory Pricing and Spatial Competition in Two-Sided Media Markets

Kodera Toshiki ()
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Kodera Toshiki: Faculty of Management and Economics, Aomori Public University

The B.E. Journal of Economic Analysis & Policy, 2015, vol. 15, issue 2, 891-926

Abstract: This study describes a spatial model of price discrimination in two-sided media markets. Given that media platforms offer a uniform price for consumers and either a uniform or discriminatory price for advertisers, we compare a platform’s profit and welfare under these two different pricing schemes. In contrast to the well-known result that price discrimination based on a consumer’s location leads to lower profits, if consumers have a strong aversion to advertising, we show that a platform’s profit is better off under price discrimination. In addition, if consumers rather dislike advertising, we show that price discrimination is detrimental to both a platform’s profit and the consumer’s welfare.

Keywords: price discrimination; two-sided markets; spatial competition (search for similar items in EconPapers)
Date: 2015
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DOI: 10.1515/bejeap-2013-0178

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