Andrea Mangani

The optimal ratio between advertising and sales income

We derive the optimal ratio between advertising and sales income when a publisher maximises its profits with respect to advertising space and product price. If consumers are more adverse towards advertising than towards price, the ratio is higher. The same theoretical framework is used to examine the relationship between the structure of media revenues and product quality. The findings of the model confirm empirical observations and some stylised facts of the media industry. In addition, we discuss some possible extensions of the model in order to include the evolution of business methods in media markets, and describe the managerial implications.

Does Product Differentiation relax Price Competition? An Experimental Answer

The literature on product differentiation predicts that firms are likely to differentiate their products in order to relax price competition. We tested this theoretical result in a laboratory setting, by organizing twenty-four markets where products were offered with different quality levels. We compared two treatments which varied only in the degree of exogenous quality differentiation. The main result was that higher product differentiation determines low price competition and thus higher prices.

Experimental Analysis of Strategic Product Differentiation

Theoretical models of multidimensional product differentiation predict that in duopoly firms differentiate maximally along one dimension and minimally along the other dimensions. We experimentally reproduce a market in which firms can differentiate their products along two horizontal dimensions. The main result is that subjects do not differentiate their products and locate near the center consumersi distribution.

Social networking websites: who survives?

ABSTRACT This article studies the relationship between the characteristics of social networking sites (SNSs) and their probability of survival. The data sample includes 224 SNSs launched throughout the world from 1995 to 2015 and that can be described by focus strategy, business financing methods and interactions with external companies, such as partnerships, mergers and acquisitions. Three factors are systematically associated with closure hazard rates. First, compared with SNSs that address a specialized audience, generalist SNSs have a three times higher probability of closing. Second, being the target of a merger or acquisition more than doubles the probability of closure. Third, new entrants have higher probability to survive if compared with SNSs with experience in the industry.

A Note on the Optimal Advertising/Subscriptions Ratio

I derive the optimal ratio between advertising and subscriptions revenues when a monopolist publisher maximizes its profits with respect to advertising space and subscription price. If consumers are more adverse towards advertising than towards price, the ratio is higher.