The importance of consumer multi-homing (joint purchases) for market performance: mergers and entry in media markets
The article "The importance of consumer multi-homing (joint purchases) for market performance: mergers and entry in media markets" by Simon P. Anderson, Øystein Foros and Hans Jarle Kind has been accepted for publication by the Journal of Economics and Management Strategy.
Abstract:
Consumer "multi-homing" (watching two TV channels, or buying two news magazines) has surprisingly important effects on market equilibrium and performance in (two-sided) media markets. We show this by introducing consumer multi-homing and advertising-finance into the classic circle model of product differentiation. When consumers multi-home (attend more than one platform), media platforms can charge only incremental-value prices to advertisers. Entry or merger leaves consumer prices unchanged under consumer multi-homing, but leaves advertiser prices unchanged under single-homing: multi-homing flips the side of the market on which platforms compete. In contrast to standard circle results, equilibrium product variety can be insufficient under multi-homing.