Nagler, Matthew (2006): Understanding the Internet's relevance to media ownership policy: a model of too many choices.
Download (155kB) | Preview
Does the Internet provide a failsafe against media consolidation in the wake of an easing of media ownership rules? This paper posits a model of news outlet selection on the Internet in which consumers experience cognitive costs that increase with the number of options faced. Consistent with psychological evidence, these costs may be reduced by constraining one’s choice set to “safe bets” familiar from offline (e.g., CNN.com). It is shown that, as the number of outlets grows, dispersion of consumer visitation across outlets inevitably declines. Consequently, independent Internet outlets may fail to mitigate lost outlet independence on other media.
|Item Type:||MPRA Paper|
|Original Title:||Understanding the Internet's relevance to media ownership policy: a model of too many choices|
|Keywords:||Choice framing; Media ownership; Internet; Differentiated products; Location models|
|Subjects:||L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L11 - Production, Pricing, and Market Structure ; Size Distribution of Firms
L - Industrial Organization > L8 - Industry Studies: Services > L86 - Information and Internet Services ; Computer Software
D - Microeconomics > D1 - Household Behavior and Family Economics > D11 - Consumer Economics: Theory
|Depositing User:||Matthew Nagler|
|Date Deposited:||10. Mar 2007|
|Last Modified:||24. Feb 2015 22:33|
Adamic, L. A., Huberman, B. A., 2000. The nature of markets in the World Wide Web. Quarterly Journal of Electronic Commerce 1, pp. 5-12. Anderson, S. P., Coate, S., 2005. Market provision of broadcasting: a welfare analysis. Review of Economic Studies 72, pp. 947-972. Anderson, S. P., Neven, D. J., 1989. Market efficiency with combinable products. European Economic Review 33, pp. 707-719. Armstrong, M., 2005. Competition in two-sided markets. Working paper, University College London. d’Aspermont, C., Gabszewicz, J., Thisse, J.-F., 1979. On Hotelling’s ‘Stability in competition.’ Econometrica 47, pp. 1145-1150. Berry, S. T., Waldfogel, J., 2001. Do mergers increase product variety? Evidence from radio broadcasting. Quarterly Journal of Economics 116, pp. 1009-1025. Chernev, A., 2003. Product assortment and individual decision processes. Journal of Personality and Social Psychology 85, pp. 151-162. Chernev, A., 2005. Feature complementarity and assortment in choice. Journal of Consumer Research 31, pp. 748-759. Chiang, A. C., 1984. Fundamental Methods of Mathematical Economics, Third Edition. McGraw-Hill, Singapore (International Edition). Chwe, M. S.-Y., 2001. Rational Ritual: Culture, Coordination, and Common Knowledge. Princeton University Press, Princeton. Dhar, R., 1997. Consumer preference for a no-choice option. Journal of Consumer Research 24, pp. 215-231. Dos Santos Ferreira, R., Thisse, J.-F., 1996. Horizontal and vertical differentiation: the Launhardt model. International Journal of Industrial Organization 14, pp. 485-506. Gabszewicz, J. J., Laussel, D., Sonnac, N., 2002. Press advertising and the political differentiation of newspapers. Journal of Public Economic Theory 4, pp. 317-334. 31 Gabszewicz, J. J., Laussel, D., Sonnac, N., 2004. Programming and advertising competition in the broadcasting industry. Journal of Economics & Management Strategy 13, pp. 657-669. Gal-Or, E., Dukes, A., 2003. Minimum differentiation in commercial media markets. Journal of Economics & Management Strategy 12, pp. 291-325. Grabner-Kraeuter, S., 2002. The role of consumers’ trust in online-shopping. Journal of Business Ethics 39, pp. 43-50. Grace, S. H., 1970. Professor Samuelson on free enterprise and economic efficiency: a comment. Quarterly Journal of Economics 84, pp. 337-345. Hagel, J., III, Singer, M., 1999. Net Worth: Shaping Markets When Customers Make the Rules. Harvard Business School Press, Boston. Hauser, J. R., Wernerfelt, B., 1990. An evaluation cost model of consideration sets. Journal of Consumer Research 16, pp. 393-408. Hoernig, S. H., Valletti, T. M., 2006. Mixing goods with two-part tariffs. Working paper, Imperial College London. Hogan & Hartson, L.L.P., 2004. FCC update: Third Circuit remands media ownership rules. Retrieved August 30, 2006, from http://www.hhlaw.com/newsStand/pubDetail.aspx?publication=1041. Hotelling, H., 1929. Stability in competition. Economic Journal 39, 41-57. Ilfeld, J. S., Winer, R. S., 2002. Generating website traffic. Journal of Advertising Research 42, pp. 49-61. Iyengar, S. S., Jiang, W., 2005. The psychological costs of ever increasing choice: A fallback to the sure bet. Working Paper, Columbia University. Iyengar, S. S., Lepper, M. R., 2000. When choice is demotivating: Can one desire too much of a good thing? Journal of Personality and Social Psychology 79, pp. 995-1006. Kaiser, U., 2006. Magazines and their companion websites: competing outlet channels? Review of Marketing Science 4, Article 3. Kaiser, U., Kongsted, H. C., 2005. Do magazines’ ‘companion websites’ cannibalize the demand for the print version? Working Paper, Centre for Applied Microeconometrics, Institute for Economics, University of Copenhagen. Kotler, P., 1976. Marketing Management, Third Edition. Prentice Hall, Englewood Cliffs, NJ. 32 Lambertini, L. Vertical differentiation in a generalized model of spatial competition. Annals of Regional Science 35, pp. 227-238. Lee, B-C, Ang, L., Dubelaar, C., 2005. Lemons on the web: A signaling approach to the problem of trust in Internet commerce. Journal of Economic Psychology 26, pp. 607- 623. Loewenstein, G., 2000. Costs and benefits of health- and retirement-related choice. In: Burke, S., Kingson, E., Reinhardt, U. (Eds.), Social Security and Medicare: Individual vs. Collective Risk and Responsibility. Brookings Institution Press, Washington, D.C. MacKie-Mason, Shenker, J. S., Varian, H. R., 1996. Service architecture and content provision: the network provider as editor. Telecommunications Policy 20, pp. 203- 217. Malhotra, N. K., 1982. Information load and consumer decision making. Journal of Consumer Research 8, pp. 419-430. McCullagh, D., 2003. FCC debate: Is the Net enough? CNET News.com, May 31, 2003. Retrieved August 30, 2006, from http://news.com.com/2100-1028-1011850.html. Nagler, M. G., 1993. Rather bait than switch: Deceptive advertising with bounded consumer rationality. Journal of Public Economics 51, pp. 359-378. Rochet, J.-C., Tirole, J., 2003. Platform competition in two-sided markets. Journal of the European Economic Association 1 (4), pp. 990-1029. Salop, S. C., 1979. Monopolistic competition with outside goods. Bell Journal of Economics 10, pp. 141-156. Schmalensee, R., 1978. Entry deterrence in the ready-to-eat breakfast cereal industry. Bell Journal of Economics 9, pp. 305-327. Schwartz, B., 2000. Self-determination: The tyranny of freedom. American Psychologist 55, pp. 79-88. Shugan, S. M., 1980. The cost of thinking. Journal of Consumer Research 7, pp. 99-111. Simon, H., 1955. A behavioral model of rational choice. Quarterly Journal of Economics 68, pp. 99-118. Smith, M. D., Bailey, J., Brynjolfsson, E., 2000. Understanding digital markets. In: Brynjolfsson, E., Kahin, B. (Eds.), Understanding the Digital Economy. MIT Press, Cambridge, MA. 33 Stigler, G. J., 1961. The economics of information. Journal of Political Economy 69, pp. 213- 225. Sutton, J., 1991. Sunk Costs and Market Structure. MIT Press, Cambridge, MA. Wu, I., 2004. Canada, South Korea, Netherlands and Sweden: Regulatory implications of the convergence of telecommunications, broadcasting and Internet services. Telecommunications Policy 28, pp. 79-96.