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Price discrimination and competition in two-sided markets: Evidence from the Spanish local TV industry

Author

Listed:
  • Gil, Ricard

    (IESE Business School)

  • Riera-Crichton, Daniel

    (Bates College)

Abstract
In this paper, we empirically test the relation between price discrimination and product market competition in a two-sided market setting using a new data set of Spanish local TV stations that provides information on subscription and advertising prices per station for 1996, 1999 and 2002. During these years, changes in regulation in this sector had a deep impact on the degree of local market competition. We use differences in market structure across markets and across years to study the relation between competition and price discrimination in this setting. Our findings suggest that stations in more competitive markets are less likely to use price discrimination. We also find evidence that stations price discriminating in a market are also more likely to price discriminate on the other market. Finally, cable subscription fees and advertising prices are higher in more competitive markets which suggests that tougher competition may increase market segmentation through station differentiation, driving stations to charge higher uniform prices to more loyal customers. This may indicate that less price discrimination may be associated with lower consumer surplus in all markets.

Suggested Citation

  • Gil, Ricard & Riera-Crichton, Daniel, 2011. "Price discrimination and competition in two-sided markets: Evidence from the Spanish local TV industry," IESE Research Papers D/894, IESE Business School.
    • Handle: RePEc:ebg:iesewp:d-0894
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    File URL: http://www.iese.edu/research/pdfs/DI-0894-E.pdf
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    Citations

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    Cited by:

    1. Qihong Liu & Konstantinos Serfes, 2013. "Price Discrimination in Two‐Sided Markets," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 22(4), pages 768-786, December.
    2. Charles Angelucci & Julia Cagé, 2019. "Newspapers in Times of Low Advertising Revenues," American Economic Journal: Microeconomics, American Economic Association, vol. 11(3), pages 319-364, August.
    3. Nishida, Mitsukuni & Gil, Ricard, 2014. "Regulation, enforcement, and entry: Evidence from the Spanish local TV industry," International Journal of Industrial Organization, Elsevier, vol. 32(C), pages 11-23.
    4. Elias Carroni, 2018. "Behaviour-based price discrimination with cross-group externalities," Journal of Economics, Springer, vol. 125(2), pages 137-157, October.
    5. Elias Carroni, 2018. "Poaching in media: Harm to subscribers?," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 27(2), pages 221-236, June.
    6. Ricard Gil & Mitsukuni Nishida, 2012. "Does Regulation Drive Competition? Evidence from the Spanish Local TV Industry," Working Papers 12-05, NET Institute.
    7. Kodera Toshiki, 2015. "Discriminatory Pricing and Spatial Competition in Two-Sided Media Markets," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 15(2), pages 891-926, April.

    More about this item

    Keywords

    Price discrimination; market competition; Local TV Industry; product; subscription; advertising;
    All these keywords.

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