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Platform Mergers: Lessons from a Case in the Digital TV Market

Ivaldi, Marc and Zhang, Jiekai (2020) Platform Mergers: Lessons from a Case in the Digital TV Market. TSE Working Paper, n. 20-1112, Toulouse

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Abstract

This paper contributes to the analysis of mergers in two-sided markets, notably those in which a platform provides its service for free on one side but obtains all its revenues from the other, as in the digital TV industry. Specifically, we assess a decision of the French competition authority which approved the merger of the broadcasting services of the TV channels involved
but imposed a behavioral remedy prohibiting the merger of their respective advertising sales services. To do so, we build a structural model allowing for multi-homing of advertisers and, using a comprehensive dataset, we estimate the demand of viewers and advertisers. Our evaluation provides evidence that the remedy has been ineffective at limiting the increase in prices and amounts of advertising, due to the cross-side externalities between viewers and advertisers. Without resulting in significant positive effects on the viewers' surplus, the remedy has also drastically increased the advertisers' total cost. Nevertheless, the remedy has benefited the competitors of the merging channels. The main lesson of our analysis is that, in the process of designing competition or regulatory policy for two-sided markets, ignoring the interaction between the two sides of platforms can result in unexpected outcomes.

Item Type: Monograph (Working Paper)
Language: English
Date: June 2020
Place of Publication: Toulouse
Uncontrolled Keywords: Two-sided market, platform merger, advertising, TV market, competition policy
JEL Classification: K21 - Antitrust Law
L10 - General
L40 - General
L82 - Entertainment; Media (Performing Arts, Visual Arts, Broadcasting, Publishing, etc.)
M37 - Advertising
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Institution: Université Toulouse 1 Capitole
Site: UT1
Date Deposited: 12 Jun 2020 09:53
Last Modified: 12 Jun 2020 09:53
OAI Identifier: oai:tse-fr.eu:124370
URI: http://publications.ut-capitole.fr/id/eprint/35053

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