Freemium as Optimal Menu Pricing

In online contents markets, content providers collect revenues from both consumers and advertisers by segmenting consumers who are willing to avoid advertisements and who are not. To analyze such situations, I construct a model of menu pricing by advertising platforms in two-sided markets. I find that, under certain condition, although a monopolistic platform can choose any menu of price-advertisement pairs, the optimal menu consists of only two services: ad-supported basic service and ad-free premium service. In addition, if the willingness to pay of advertisers is sufficiently high, the basic service is offered for free. This menu pricing is well known as freemium. Furthermore, this binary structure remains to hold an equilibrium menu pricing even under duopoly

Freemium as Optimal Menu Pricing

In online contents markets, content providers collect revenues from both consumers and advertisers by segmenting consumers who are willing to avoid advertisements and who are not. To analyze such situations, I construct a model of menu pricing by advertising platforms in two-sided markets. I find that, under certain condition, although a monopolistic platform can choose any menu of price-advertisement pairs, the optimal menu consists of only two services: ad-supported basic service and ad-free premium service. In addition, if the willingness to pay of advertisers is sufficiently high, the basic service is offered for free. This menu pricing is well known as freemium. Furthermore, this binary structure remains to hold an equilibrium menu pricing even under duopoly

A Structural Solution to Roaming in Europe

This paper suggests that international roaming markets suffer from structural flaws in the way that roaming agreements are established in Europe. The initial roaming interventions by the European Commission in 2007 have been very welfare enhancing and the transfer of producer surplus to consumers has brought significant benefits to end users. Nevertheless, there are clear opportunity costs of maintaining and/or extending the current roaming Regulation. The price for wholesale roaming services in a given country is driven principally by the amount of traffic that an operator is willing to send back to the country requesting a price offer and not on the basis of the roaming services requested. The paper suggests that by breaking the link between the prices offered in one country and the volume of returned traffic will enable the wholesale market for international roaming to operate competitively. It is further suggested that retail price regulation is unwarranted when the wholesale market can operate competitively irrespective of the issue of the retail elasticity of demand for these services. Preliminary, suggestions are put forward as to how policy makers could transition from the current regime to a future market based regime by putting a number of required enablers in place.Roaming regulation, mobile telephony, European single market

The Prohibition of the Proposed Springer-ProSiebenSat.1-Merger: How much Economics in German Merger Control?

We review the Bundeskartellamt (Federal Cartel Office Germany) decision on the proposed merger between Springer and ProSiebenSat.1 from an economic point of view. In doing so, it is not our goal to analyse whether the controversial decision by the Bundeskartellamt has been correct or flawed from a legal point of view. Instead, we analyse whether the economic reasoning in the decision document reflects state-of-the-art economic theory on conglomerate mergers. Regarding such types of mergers, anticompetitive effects either do not occur regularly or are more often than not overcompensated by efficiency gains, so that a standard welfare perspective demands reluctance concerning antitrust interventions. This is particularly true if two-sided markets, like media markets, are involved. However, anticompetitive conglomerate mergers are not impossible, in particular in neighbouring markets where there is some relationship between the products of the merging companies. In line with the more-economic approach in European merger control, a particular thorough line of argumentation, backed with particularly convincing economic evidence, is necessary to justify a prohibition of a conglomerate merger from an economic point of view. Against this background, we do not find the reasoning of the Bundeskartellamt entirely convincing and sufficiently strong to justify a prohibition of the proposed combination from an economic perspective. The reasons are that (i) the Bundeskartellamt fails to continuously consider consumer and customer welfare as the relevant standards, (ii) positive efficiency and welfare effects of cross-media strategies are neglected, (iii) in contrast, the competition agency sometimes appears to view profitability of post-merger strategy options to be per se anticompetitive (efficiency offence), (iv) the incontestability of the relevant markets is not sufficiently substantiated, (v) inconsistencies occur regarding the symmetry of the TV advertising market duopoly versus the unique role of the BILD-Zeitung and (vi) the employment of modern economic instruments appears to be underdeveloped. Thus, we conclude that the Bundeskartellamt has not embraced the European more-economic approach in the analysed decision. However, one can discuss whether economic effects are overcompensated in this case by concerns about a reduction in diversity of opinion and threats to free speech. Similar to the Bundeskartellamt, we do not consider these concerns in our analysis.merger control, media markets, more-economic approach, conglomerate mergers, cross-promotion

The prohibition of the proposed Springer-ProSiebenSat.1-Merger: how much economics in German merger control?

We review the Bundeskartellamt (Federal Cartel Office Germany) decision on the proposed merger between Springer and ProSiebenSat.1 from an economic point of view. In doing so, it is not our goal to analyse whether the controversial decision by the Bundeskar-tellamt has been correct or flawed from a legal point of view. Instead, we analyse whether the economic reasoning in the decision document reflects state-of-the-art economic theory on conglomerate mergers. Regarding such types of mergers, anticompetitive effects either do not occur regularly or are more often than not overcompensated by efficiency gains, so that a standard welfare perspective demands reluctance concerning antitrust interventions. This is particularly true if two-sided markets, like media markets, are involved. However, anticompe-titive conglomerate mergers are not impossible, in particular in neighbouring markets where there is some relationship between the products of the merging companies. In line with the more-economic approach in European merger control, a particular thorough line of argumen-tation, backed with particularly convincing economic evidence, is necessary to justify a pro-hibition of a conglomerate merger from an economic point of view. Against this background, we do not find the reasoning of the Bundeskartellamt entirely convincing and sufficiently strong to justify a prohibition of the proposed combination from an economic perspective. The reasons are that (i) the Bundeskartellamt fails to continuously consider consumer and customer welfare as the relevant standards, (ii) positive efficiency and welfare effects of cross-media strategies are neglected, (iii) in contrast, the competition agency sometimes ap-pears to view profitability of post-merger strategy options to be per se anticompetitive (effi-ciency offence), (iv) the incontestability of the relevant markets is not sufficiently substanti-ated, (v) inconsistencies occur regarding the symmetry of the TV advertising market duopoly versus the unique role of the BILD-Zeitung and (vi) the employment of modern economic instruments appears to be underdeveloped. Thus, we conclude that the Bundeskartellamt has not embraced the European more-economic approach in the analysed decision. However, one can discuss whether economic effects are overcompensated in this case by concerns about a reduction in diversity of opinion and threats to free speech. Similar to the Bundeskartellamt, we do not consider these concerns in our analysis. --merger control,media markets,more-economic approach,conglomerate mergers,cross-promotion

Further insights into exporter profiles: a classificatory model

One of the most relevant developments in the recent decades has been the progressive internationalisation of the world economy. To a great extent, physical borders have been removed by technological advancement, and this fact has made possible a rapprochement between countries and their respective cultures. For firms, this situation offers a range of possibilities owing to market increase. But, at the same time, domestic firms will have to face a rise in competition, and, probably, a market share decrease caused by the presence of foreign firms in their local market. Thus, to ensure survival, international expansion of firms’ activities becomes a necessity more than just an option. Despite this evidence, not all firms feel inclined to tackle their internationalisation process. Even between firms already sending their products abroad, it is possible to distinguish those ones that are fully engaged in export activity from those that just consider it an occasional task. That is to say, all exporters have neither the same international orientation, nor show the same export intensity. Consequently, grouping exporters in a single category could be misleading and could also hinder obtaining solid results in this research area. Furthermore, such a classification can counteract the efficiency of governmental export assistance programmes.The aim of this paper is to carry out a closer examination of the differences between active and passive exporters. With this purpose in mind, we first submit the considered variables to a non-parametric test in order to select those ones that better differentiate between both groups of exporters. Once the most relevant disparities are discovered, the significant variables are used to elaborate a classificatory model via a logistic function. The empirical analysis is based upon data collected from small and medium sized manufacturing firms located in Castilla-La Mancha, an inland region of Spain. The results indicate that a firm’s international experience and export intensity, and managers’ perceptions of foreign trade barriers are the most effective variables for distinguishing active from passive exporters. The obtained model accurately classifies 93% of cases. Finally, these findings allow us to formulate some policy recommendations that, probably, will increase the efficiency of export promotion expenditures.

The rise of the sharing economy: estimating the impact of Airbnb on the hotel industry

Peer-to-peer markets, collectively known as the sharing economy, have emerged as alternative suppliers of goods and services traditionally provided by long-established industries. We explore the economic impact of the sharing economy on incumbent firms by studying the case of Airbnb, a prominent platform for short-term accommodations. We analyze Airbnb's entry into the state of Texas, and quantify its impact on the Texas hotel industry over the subsequent decade. We estimate that in Austin, where Airbnb supply is highest, the causal impact on hotel revenue is in the 8-10% range; moreover, the impact is non-uniform, with lower-priced hotels and those hotels not catering to business travelers being the most affected. The impact manifests itself primarily through less aggressive hotel room pricing, an impact that benefits all consumers, not just participants in the sharing economy. The price response is especially pronounced during periods of peak demand, such as SXSW, and is due to a differentiating feature of peer-to-peer platforms -- enabling instantaneous supply to scale to meet demand.Accepted manuscrip

A predictive model of the export behaviour of small and medium sized firms: an applic.

Based on an extensive theoretical review, the aim of this paper is to carry out a closer examination of the differences between exporters according to their commitment to the international market. Once the main disparities are identified by means of a non-parametric test, a logistic analysis based upon data collected from small and medium sized manufacturing firms is conducted in order to construct a classificatory model.Export behaviour; Manufacturing; Small to medium-sized firms; Logistic regression; Ma