Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/81535
Authors: 
Tåg, Joacim
Year of Publication: 
2009
Series/Report no.: 
IFN Working Paper 789
Abstract: 
Media firms sometimes allow consumers to pay to remove advertisements from an advertisement-based product. We formally examine an ad-based monopolist's incentives to introduce this option. When deciding whether to introduce the option to pay, the monopolist compares the potential direct revenues from consumers with lost advertising revenues from not intermediating those consumers to advertisers. If the option is introduced, the media firm increases advertising quantity to make the option to pay more attractive. This hurts consumers, but benefits the media firm and advertisers. Total welfare may increase or decrease. Perhaps surprisingly, more annoying advertisements may lead to an increase in advertising quantity.
Subjects: 
Advertising
Damaged goods
Media markets
Price discrimination
Two-sided markets
Vertical differentiation
JEL: 
D42
L15
L59
M37
Document Type: 
Working Paper

Files in This Item:
File
Size
172.41 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.