Published by De Gruyter

Volume 11 Issue 2

June 2012

Issue of Review of Network Economics

Contents
Journal Overview

Article

June 11, 2012

Regulating Advertising in the Presence of Public Service Broadcasting

Torben Stühmeier, Tobias Wenzel

Abstract

Television advertising levels in Europe are regulated according to the "Audiovisual Service Media Directive", where member states of the European Union usually impose stricter regulation on their Public Service Broadcasting (PSB) channels. The present model evaluates the effects of symmetric and asymmetric regulation of ad levels on competition for viewers and advertisers in a duopoly framework where a public and a private broadcaster compete. If both broadcasters face the same advertising cap, regulation can be profit-increasing for both channels. If the public broadcaster is more strictly regulated, this may benefit the commercial rival if higher revenues in the advertising market outweigh the loss in viewership.

June 11, 2012

Feedback Loop Effects in Payment Card Markets: Empirical Evidence

Santiago Carbó-Valverde, José Manuel Liñares-Zegarra, Francisco Rodríguez-Fernández

Abstract

While some studies have assumed that mature and well-established platforms do not exhibit feedback loop effects, other recent contributions have suggested that these effects may exist. Using a unique database that provides detailed information on both cardholder and merchant sides of the Spanish payment card market, we find empirical evidence of feedback loop effects. We also offer some evidence on the relative value that consumers (merchants) place on network characteristics such as the degree of merchant acceptance (cardholder adoption) and prices.

June 11, 2012

Should Publicly Funded Postal Services be Reduced? A Cost-Benefit Analysis of the Universal Service Obligation in Norway

Henrik Lindhjem, Simen Pedersen

Abstract

We conduct, to our knowledge, the first cost-benefit analysis of the universal service obligation (USO) in the postal sector. Three alternatives are analysed that reduce delivery frequency and/or delivery speed, with particular emphasis on quantifying the potential loss of consumer benefits. Social cost savings are analysed for the service provider, for the environment and for the government through lower levels of distortionary taxes. Although there are challenges involved in measuring the net welfare change, especially loss in consumer benefits, our results suggest that only the largest reduction in the USO may be justified on social efficiency grounds.

June 11, 2012

Inviting Competition to Achieve Critical Mass

Amir Etziony, Avi Weiss

Abstract

In this paper we analyze a network market in which it is beneficial for a producer to invite competitors to share a market, even when this is not needed in order to affect consumer beliefs. Because of the nature of such goods, the demand curve for network markets typically rises and then falls. If the marginal cost curve of the producer is also upwardly sloping, the firm may be either unable to profitably produce a sufficient quantity to satisfy demand at any price, or may be able to, but benefit more if there are other producers also. Interestingly, optimal behavior by the producer is independent of the type of competition that will exist between the firms after the competitors have entered the market. Because the firm controls the number of entrants, it can always guarantee that it will receive maximal profits given the demand function and its technology. Implications for antitrust legislation and for strategic behavior by the firm are discussed.

About this journal

The Review of Network Economics seeks to help policy makers, academics, and practitioners keep informed of new research and policy debate in network economics and related subjects that are relevant to the study of network industries.

By publishing high quality research on topical issues relevant to network industries, it is hoped readers will be able to gain a deeper understanding of the economic issues involved and that this will improve the quality of decision making by private and public organisations, and debate among researchers. The articles can cover specific network industries, or may deal with general issues that have relevance to a number of different network industries, including topics in the economics of networks, regulation, competition law, or industrial organisation. Papers that provide insights into policy debates are especially welcome, as are up-to-date surveys, book reviews, and comments.

Topics

Network industries
Economics of networks
Regulation and competition law
Industrial organization
Energy
Market exchanges and intermediaries
Media
On-line services
Payment systems
Postal services
Software platforms
Telecommunications and transportation networks

Article formats

Up-to-date surveys, theoretical and empirical research articles, book reviews, and comments