Simulating media platform mergers

Marc Ivaldi*, Jiekai Zhang

*Corresponding author for this work

Research output: Contribution to journalArticleScientificpeer-review

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.
Original languageEnglish
Article number102729
Peer-reviewed scientific journalInternational Journal of Industrial Organization
ISSN0167-7187
DOIs
Publication statusPublished - 09.03.2021
MoE publication typeA1 Journal article - refereed

Keywords

  • 512 Business and Management
  • two-sided market
  • platform merger
  • advertising
  • TV market
  • competition policy

Areas of Strength and Areas of High Potential (AoS and AoHP)

  • AoS: Competition economics and service strategy - Quantitative consumer behaviour and competition economics

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