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.
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.