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Estimating market power in a two-sided market: the case of newspapers

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Author Info
Elena Argentesi
Lapo Filistrucchi

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Abstract

The newspaper industry is a two-sided market: the readers market and the advertising market are closely linked by inter-market network externalities. We estimate market power in the Italian newspaper industry by building a structural model which encompasses a demand estimation for differentiated products on both sides of the market and where profit maximization by the publishing firms takes into account the interactions between them. The question that we address is whether the observed price pattern is consistent with profit-maximizing behavior by competing firms or is instead driven by some form of (tacit or explicit) coordinated practice.

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Paper provided by European University Institute in its series Economics Working Papers with number ECO2005/07.

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Date of creation: 2005
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Handle: RePEc:eui:euiwps:eco2005/07

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Related research
Keywords: demand estimation market power two-sided markets newspapers differentiated products.

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Find related papers by JEL classification:
L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Ivaldi, Marc & Verboven, Frank, 2001. "Quantifying the Effects from Horizontal Mergers in European Competition Policy," CEPR Discussion Papers 2697, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  2. Elena Argentesi, 2004. "Demand Estimation for Italian Newspapers: The Impact of Weekly Supplements," Economics Working Papers ECO2004/28, European University Institute. [Downloadable!]
  3. Caillaud, Bernard & Jullien, Bruno, 2003. " Chicken & Egg: Competition among Intermediation Service Providers," RAND Journal of Economics, The RAND Corporation, vol. 34(2), pages 309-28, Summer.
  4. Daniel A. Ackerberg & Gautam Gowrisankaran, 2006. "Quantifying Equilibrium Network Externalities in the ACH Banking Industry," NBER Working Papers 12488, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  5. Ulrich Kaiser, 2002. "The Effects of Website Provision on the Demand for German Women's Magazines," NBER Working Papers 8806, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  6. Kaiser, Ulrich & Wright, Julian, 2004. "Price Structure in Two-sided Markets : Evidence from the Magazine Industry?," ZEW Discussion Papers 04-80, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
    Other versions:
  7. Gautam Gowrisankaran & Daniel A. Ackerberg, 2003. "Quantifying Equilibrium Network Externalities in the ACH Banking Industry," Working Papers 03-06, NET Institute, revised Sep 2003. [Downloadable!]
  8. Steven T. Berry, 1994. "Estimating Discrete-Choice Models of Product Differentiation," RAND Journal of Economics, The RAND Corporation, vol. 25(2), pages 242-262, Summer. [Downloadable!] (restricted)
  9. Chaudhri, Vivek, 1998. "Pricing and efficiency of a circulation industry: The case of newspapers," Information Economics and Policy, Elsevier, vol. 10(1), pages 59-76, March. [Downloadable!] (restricted)
  10. ARGENTESI, Elena & IVALDI, Marc, 2005. "Market Definition in Printed Media Industry: Theory and Practice," IDEI Working Papers 376, Institut d'Économie Industrielle (IDEI), Toulouse. [Downloadable!]
  11. Ulrich Kaiser, 2004. "An Estimated Model of the German Magazine Market," CIG Working Papers SP II 2004-07, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG). [Downloadable!]
  12. Dertouzos, James N & Trautman, William B, 1990. "Economic Effects of Media Concentration: Estimates from a Model of the Newspaper Firm," Journal of Industrial Economics, Blackwell Publishing, vol. 39(1), pages 1-14, September. [Downloadable!] (restricted)
  13. Berry, Steven & Levinsohn, James & Pakes, Ariel, 1995. "Automobile Prices in Market Equilibrium," Econometrica, Econometric Society, vol. 63(4), pages 841-90, July. [Downloadable!] (restricted)
  14. Bucklin, Randolph E & Caves, Richard E & Lo, Andrew W, 1989. "Games of Survival in the U.S. Newspaper Industry," Applied Economics, Taylor and Francis Journals, vol. 21(5), pages 631-49, May.
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Argentesi, Elena & Ivaldi, Marc, 2005. "Market Definition in the Printed Media Industry: Theory and Practice," CEPR Discussion Papers 5096, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  2. Lapo Filistrucchi, 2005. "The Impact of Internet on the Market for Daily Newspapers in Italy," Economics Working Papers ECO2005/12, European University Institute. [Downloadable!]
  3. ARGENTESI, Elena & IVALDI, Marc, 2005. "Market Definition in Printed Media Industry: Theory and Practice," IDEI Working Papers 376, Institut d'Économie Industrielle (IDEI), Toulouse. [Downloadable!]
  4. Ulrich Kaiser, 2007. "When Pricing Below Marginal Cost Pays Off: Optimal Price Choice in a Media Market with Upfront Pricing," CIE Discussion Papers 2007-05, University of Copenhagen. Department of Economics. Centre for Industrial Economics. [Downloadable!]
  5. Behringer, Stefan, 2007. "Spacial Predation in the UK Newspaper Industry," MPRA Paper 3242, University Library of Munich, Germany, revised 15 Apr 2007. [Downloadable!]
  6. Christos Genakos & Tommaso Valletti, 2007. "Testing the "Waterbed" Effect in Mobile Telephony," CEP Discussion Papers dp0827, Centre for Economic Performance, LSE. [Downloadable!]
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