By Jack Zanville Sissors; E Reynold Petray
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Extra info for Advertising media planning
Analysis of Alternative Monopoly Cases In this Appendix we analyze the monopoly media case in the situation where one type has both a higher willingness to pay and a higher willingness to accept advertising. Let us …rst consider the subcase where UH UL and UH = H UL = L, that is where the high types have a higher willingness to pay in both dimensions. In this case, the high types are unambiguously the more attractive customers for the monopolist. This renders the optimal behavior of the monopolist similar to price discriminating behavior in standard goods markets (Mussa and Rosen 1978).
1 as vH ! vH 0 we have C SB ! C F B from Proposition 4. Also we know C F B As vH ! vH H H H Hence, for every SB ( ; v 0 < 1 there exists an " > 0 such that CH H ") H H CP for 0 CP ( ; vH < 1. "), which proves the statement. Taken together, Steps 1, 2, 4 and 5 prove the proposition for the case H L > 1. If this condition is not met, the high types will prefer …nancing of the pooling media product by price rather than advertising whenever values in CP change if 1. In this case, it may thus be that the equilibrium H P gets too low.
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Advertising media planning by Jack Zanville Sissors; E Reynold Petray