The Role of Online Platforms for Media Markets – Two‐Dimensional Spatial Competition in a Two‐Sided Market
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BORIS DOI
Publisher DOI
Description
We analyze the market for online and offline media in a model of two-dimensional spatial competition where
media outlets sell content and advertising space. Consumer preferences are distributed along the style and
type of news coverage where the distance costs may vary across dimensions. For integrated provision of online
and offline platforms we show that entering the online market reduces average profits and may even
constitute a prisoner's dilemma. Specialized provision may yield polarization in the style and type dimensions.
This is in contrast to the maximum–minimum differentiation result previously established in the literature
on multidimensional horizontal competition. We show that maximal differentiation in both dimensions
occurs due to the discrete nature of the type dimension and asymmetric advertising markets.
media outlets sell content and advertising space. Consumer preferences are distributed along the style and
type of news coverage where the distance costs may vary across dimensions. For integrated provision of online
and offline platforms we show that entering the online market reduces average profits and may even
constitute a prisoner's dilemma. Specialized provision may yield polarization in the style and type dimensions.
This is in contrast to the maximum–minimum differentiation result previously established in the literature
on multidimensional horizontal competition. We show that maximal differentiation in both dimensions
occurs due to the discrete nature of the type dimension and asymmetric advertising markets.
Date of Publication
2013-05-31
Publication Type
Article
Subject(s)
300 - Social sciences, sociology & anthropology::330 - Economics
Contributor(s)
Additional Credits
Departement Volkswirtschaftslehre (VWL)
Series
International Journal of Industrial Organization
Publisher
Elsevier
ISSN
0167-7187
Access(Rights)
restricted