nep-mkt New Economics Papers
on Marketing
Issue of 2006‒07‒02
two papers chosen by
Joao Carlos Correia Leitao
Universidade da Beira Interior

  1. Two-Sided Markets with Pecuniary and Participation Externalities By Schmidtke, Richard
  2. Exploring the concept of web site customization: applications and antecedents By Teerling, M.L.; Huizingh, Eelco K.R.E.

  1. By: Schmidtke, Richard
    Abstract: The existing literature on "two-sided markets" addresses participation externalities, but so far it has neglected pecuniary externalities between competing platforms. In this paper we build a model that incorporates both externalities. In our setup differentiated platforms compete in advertising and offer consumers a service free of charge (such as a TV program) that is financed through advertising. We show that advertising can exhibit the properties of a strategic substitute or complement. Surprisingly, there exist cases in which platforms benefit from market entry. Moreover, we show that from a welfare point of view perfect competition is not always desirable.
    Keywords: two-sided markets; broadcasting; advertising; market entry; digital television
    JEL: D43 L13 L82
    Date: 2006–06
  2. By: Teerling, M.L.; Huizingh, Eelco K.R.E. (Groningen University)
    Abstract: While mass customization is the tailoring of products and services to the needs and wants of individual customers, web site customization is the tailoring of web sites to individual customers? preferences. Based on a review of site customization applications, the authors propose a model with four different levels standardization, adaptation, passive personalization, and active personalization). Each of these levels requires a different level of involvement of both the supplier and the customer. Based on an extensive review literature the authors then develop conceptual models of the determinants of site customization from both a customer?s and a supplier?s point of view. Both models contain the factors that determine the willingness of a party (customer or supplier) to get actively involved in web site customization. Some factors have a positive impact on the willingness to customize while others have a negative impact. Managers engaged in site customization projects should realized that site customization is not an undisputed topic. Its success will be context dependent. The presented conceptual models can be used to analyze the essentials of a particular context and to assess the potential of web site customization.
    Date: 2006

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