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Collusion and the Political Differentiation of Newspapers

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  • Marco Antonielli
  • Lapo Filistrucchi

    () (Università degli Studi di Firenze)

Abstract

We analyse a newspaper market where two editors first choose the political position of their newspaper, then set cover prices and advertising tariffs. We build on the work of Gabszewicz, Laussel and Sonnac (2001, 2002), whose model of competition among newspaper publishers we take as the stage game of an infinitely repeated game, and investigate the incentives to collude and the properties of the collusive agreements in terms of welfare and pluralism. We analyse and compare two forms of collusion: in the first, publishers cooperatively select both prices and political position; in the second, publishers cooperatively select prices only. We show that collusion on prices reinforces the tendency towards a Pensée Unique discussed in Gabszewicz, Laussel and Sonnac (2001), while collusion on both prices and the political line would tend to mitigate it. Our findings question the rationale for Joint Operating Agreements among US newspapers, which allow publishers to cooperate in setting cover prices and advertising tariffs but not the editorial line. We also show that, whatever the form of collusion, incentives to collude first increase, then decrease as advertising revenues per reader increase.

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Bibliographic Info

Paper provided by Universita' degli Studi di Firenze, Dipartimento di Scienze dell'Economia e Dell'Impresa in its series Working Papers Series with number wp2012_07.rdf.

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Length: 72 pages
Date of creation: 2012
Date of revision:
Handle: RePEc:frz:wpaper:wp2012_07.rdf

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Keywords: collusion; newspapers; two-sided markets; indirect network effects; pluralism; spatial competition;

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References

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