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Simulating media platform mergers

Marc Ivaldi () and Jiekai Zhang
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Marc Ivaldi: TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement
Jiekai Zhang: Hanken School of Economics

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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: Competition policy; TV market; Advertising; Platform merger; Two-sided market (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-ban, nep-cmp, nep-com, nep-ind, nep-law, nep-pay and nep-reg
Note: View the original document on HAL open archive server: https://hal.science/hal-03472984
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Published in International Journal of Industrial Organization, 2021, 79, ⟨10.1016/j.ijindorg.2021.102729⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03472984

DOI: 10.1016/j.ijindorg.2021.102729

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