Paying to remove advertisements
Tåg, Joacim LU
(2009)
In Information Economics and Policy
21(4).
p.245-252
- Abstract
Media firms sometimes allow consumers to pay to remove advertisements from an ad-based product. We formally examine an ad-based monopolist's incentives to introduce this option. When deciding whether or not to introduce the option to pay, the monopolist compares the potential direct revenues from consumers who pay, with the lost advertising revenues resulting from the subsequent ad removal. If the pay alternative is introduced, the media firm increases advertising quantity to make the option to pay more attractive. This outcome hurts consumers but benefits the media firm and the advertisers. Total welfare may increase or decrease. Perhaps surprisingly, more annoying advertisements may lead to an increase in advertising quantity.
Please use this url to cite or link to this publication:
https://lup.lub.lu.se/record/365d7114-6e76-4196-bfbe-149e5cf86645
- author
- Tåg, Joacim
LU
- publishing date
- 2009-11-01
- type
- Contribution to journal
- publication status
- published
- subject
- keywords
- Advertising, Damaged goods, Media markets, Price discrimination, Two-sided markets, Vertical differentiation, D42, L15, L59, M37
- in
- Information Economics and Policy
- volume
- 21
- issue
- 4
- pages
- 8 pages
- publisher
- Elsevier
- external identifiers
-
- scopus:70349765703
- ISSN
- 0167-6245
- DOI
- 10.1016/j.infoecopol.2009.02.001
- language
- English
- LU publication?
- no
- id
- 365d7114-6e76-4196-bfbe-149e5cf86645
- date added to LUP
- 2020-01-23 15:48:42
- date last changed
- 2022-04-03 00:18:16
@article{365d7114-6e76-4196-bfbe-149e5cf86645,
abstract = {{<p>Media firms sometimes allow consumers to pay to remove advertisements from an ad-based product. We formally examine an ad-based monopolist's incentives to introduce this option. When deciding whether or not to introduce the option to pay, the monopolist compares the potential direct revenues from consumers who pay, with the lost advertising revenues resulting from the subsequent ad removal. If the pay alternative is introduced, the media firm increases advertising quantity to make the option to pay more attractive. This outcome hurts consumers but benefits the media firm and the advertisers. Total welfare may increase or decrease. Perhaps surprisingly, more annoying advertisements may lead to an increase in advertising quantity.</p>}},
author = {{Tåg, Joacim}},
issn = {{0167-6245}},
keywords = {{Advertising; Damaged goods; Media markets; Price discrimination; Two-sided markets; Vertical differentiation; D42; L15; L59; M37}},
language = {{eng}},
month = {{11}},
number = {{4}},
pages = {{245--252}},
publisher = {{Elsevier}},
series = {{Information Economics and Policy}},
title = {{Paying to remove advertisements}},
url = {{http://dx.doi.org/10.1016/j.infoecopol.2009.02.001}},
doi = {{10.1016/j.infoecopol.2009.02.001}},
volume = {{21}},
year = {{2009}},
}