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Attitudes toward advertising and price competition in the press industry

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  • GABSZEWICZ, Jean
  • LAUSSEL, Didier
  • SONNAC, Nathalie

Abstract

We consider a situation of duopolistic competition in the press industry, involving two editors competing in both the newspapers' and advertising markets. The population of readers in this market is differentiated in terms of their attitudes toward advertising; some of them are assumed to be advertising-lovers, while the remaining ones are assumed to be advertising-averse. We analyse a two-period sequential game whose players are the editors each selling a magazine of different political content. The editors also sell some proportion of their newspaper's surface as advertising support for the products sold by the advertisers. In the first stage of the game, editors select the newsstand price of their magazine and, in the second stage, the advertising tarif they oppose to the advertisers. We identify the equilibrium of this sequential game and examine how it depends on the proportion of ad-lovers and ad-avoiders' readers and on the intensity of their attraction-repulsion feelings for advertising.

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Bibliographic Info

Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 2002026.

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Date of creation: 00 Apr 2002
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Handle: RePEc:cor:louvco:2002026

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Cited by:
  1. GABSZEWICZ, Jean J. & GARELLA, Paolo G. & SONNAC, Nathalie, 2005. "Newspapers’ market shares and the theory of the circulation spiral," CORE Discussion Papers 2005084, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  2. Hans Jarle Kind & Marko Köthenbürger & Guttorm Schjelderup, 2009. "Should Utility-Reducing Media Advertising be Taxed?," CESifo Working Paper Series 2589, CESifo Group Munich.
  3. Hans Jarle Kind & Tore Nilssen & Lars Sørgard, 2005. "Financing of Media Firms: Does Competition Matter?," CIE Discussion Papers 2005-08, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
  4. Matthew Ellman & Fabrizio Germano, 2004. "What do the papers sell?," Economics Working Papers 800, Department of Economics and Business, Universitat Pompeu Fabra, revised Feb 2006.
  5. Hans Jarle Kind & Tore Nilssen & Lars Sørgard, 2009. "Business Models for Media Firms: Does Competition Matter for how they Raise Revenue?," CESifo Working Paper Series 2713, CESifo Group Munich.

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