Simulating media platform mergers

Marc Ivaldi and Jiekai Zhang

International Journal of Industrial Organization, 2021, vol. 79, issue C

Abstract: The empirical analysis of media platforms economics has often neglected the multi-homing behaviour of advertisers. Assuming away the cross-substitutability and/or complementarity between the advertising slots of different platforms could damage the quality and the robustness of counterfactual analysis. To evaluate the consequence of such an abstraction, we compare the simulation results of hypothetical platform mergers when the demand on the advertising side is derived from a Translog cost model which allows for multi-homing, and when it is approximated by using a simple log-linear inverse demand model that ignores the differentiation among media platforms’ advertising slots. Ignoring the existence of substitutes or complements on the advertising side would result in overpredicting the losses of the viewers’ surplus and in underpredicting the gains in platforms’ revenues.

Keywords: Two-sided market; Platform merger; Advertising; TV market; Competition policy (search for similar items in EconPapers)
JEL-codes: K21 L10 L40 L82 M37 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:79:y:2021:i:c:s0167718721000229

DOI: 10.1016/j.ijindorg.2021.102729

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