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Newspaper Differentiation and Investments in Journalism: The Role of Tax Policy

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Author Info

  • Kind, Hans Jarle

    ()
    (Dept. of Economics, Norwegian School of Economics and Business Administration)

  • Schjelderup, Guttorm

    ()
    (Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration)

  • Stähler, Frank

    ()
    (Dept. of Economics and Business Administration , University of Würzburg)

Abstract

Newspapers are considered to be important providers of information, culture and language, and are taxed at a reduced VAT rate in most countries. This paper shows that such a policy may affect newspaper di¤erentiation and lead to greater media bias. We further show that a reduced-rate VAT scheme may lead to higher newspaper prices and less investment in journalism. These results are obtained by explicitly taking into account the fact that newspapers operate in two sided markets, where they raise revenue both from readers and advertisers.

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Bibliographic Info

Paper provided by Department of Business and Management Science, Norwegian School of Economics in its series Discussion Papers with number 2009/12.

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Length: 20 pages
Date of creation: 11 Nov 2009
Date of revision:
Handle: RePEc:hhs:nhhfms:2009_012

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Postal: NHH, Department of Business and Management Science, Helleveien 30, N-5045 Bergen, Norway
Phone: +47 55 95 92 93
Fax: +47 55 95 96 50
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Web page: http://www.nhh.no/en/research-faculty/department-of-business-and-management-science.aspx
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Keywords: Two-sided markets; ad-valorem taxes;

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References

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  1. Kind, Hans Jarle & Koethenbuerger, Marko & Schjelderup, Guttorm, 2008. "Efficiency Enhancing Taxation in Two-sided Markets," Discussion Papers 2008/1, Department of Business and Management Science, Norwegian School of Economics.
  2. Matthew A. Gentzkow & Jesse M. Shapiro, 2004. "Media, Education, and anti-Americanism in the Muslim World," Microeconomics 0402005, EconWPA.
  3. Matthew Gentzkow & Jesse M. Shapiro, 2010. "What Drives Media Slant? Evidence From U.S. Daily Newspapers," Econometrica, Econometric Society, vol. 78(1), pages 35-71, 01.
  4. Simon P. Anderson & Andre de Palma & Brent Kreider, 2000. "The Efficiency of Indirect Taxes under Imperfect Competition," Virginia Economics Online Papers 342, University of Virginia, Department of Economics.
  5. GABSZEWICZ, Jean J. & LAUSSEL, Didier & SONNAC, Nathalie, 2000. "Does press advertising foster the “pensée unique”?," CORE Discussion Papers 2000008, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  6. Jean-Charles Rochet & Jean Tirole, 2003. "Platform Competition in Two-Sided Markets," Journal of the European Economic Association, MIT Press, vol. 1(4), pages 990-1029, 06.
  7. Brekke, Kurt R. & Straume, Odd Rune, 2002. "Bilateral monopolies and location choice," Working Papers in Economics 03/02, University of Bergen, Department of Economics.
  8. Sendhil Mullainathan & Andrei Shleifer, 2002. "Media Bias," NBER Working Papers 9295, National Bureau of Economic Research, Inc.
  9. Evans David S., 2003. "Some Empirical Aspects of Multi-sided Platform Industries," Review of Network Economics, De Gruyter, vol. 2(3), pages 1-19, September.
  10. Fullerton, Don & Metcalf, Gilbert E., 2002. "Tax incidence," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 26, pages 1787-1872 Elsevier.
  11. Tabuchi, T. & Thisse, J.-F., . "Asymetric equilibria in spatial competition," CORE Discussion Papers RP -1151, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  12. S. P. Anderson & A. de Palma & B. Kreider, 2000. "Tax Incidence in Differentiated Product Oligopoly," THEMA Working Papers 2000-10, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
  13. Matthew Gentzkow & Jesse Shapiro, 2005. "Media Bias and Reputation," NBER Working Papers 11664, National Bureau of Economic Research, Inc.
  14. Claude Crampes & Carole Haritchabalet & Bruno Jullien, 2009. "ADVERTISING, COMPETITION AND ENTRY IN MEDIA INDUSTRIES -super-* ," Journal of Industrial Economics, Wiley Blackwell, vol. 57(1), pages 7-31, 03.
  15. Matthew Gentzkow & Edward L. Glaeser & Claudia Goldin, 2006. "The Rise of the Fourth Estate. How Newspapers Became Informative and Why It Mattered," NBER Chapters, in: Corruption and Reform: Lessons from America's Economic History, pages 187-230 National Bureau of Economic Research, Inc.
  16. Claude Crampes & Carole Haritchabalet & Bruno Jullien, 2005. "Advertising, Competition and Entry in Media Industries," CESifo Working Paper Series 1591, CESifo Group Munich.
  17. GABSZEWICZ, Jean J. & LAUSSEL, Didier & SONNAC, Nathalie, . "Press advertising and the political differentiation of newspapers," CORE Discussion Papers RP -1561, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  18. Dierickx, I. & Matutes, C. & Neven, D., 1988. "Indirect taxation and cournot equilibrium," International Journal of Industrial Organization, Elsevier, vol. 6(3), pages 385-399.
  19. Peitz, Martin & Valletti, Tommaso M., 2008. "Content and advertising in the media: Pay-tv versus free-to-air," International Journal of Industrial Organization, Elsevier, vol. 26(4), pages 949-965, July.
  20. Simon P. Anderson, 2005. "Regulation of Television advertising," Virginia Economics Online Papers 363, University of Virginia, Department of Economics.
  21. Matthew Gentzkow & Jesse M. Shapiro, 2008. "Competition and Truth in the Market for News," Journal of Economic Perspectives, American Economic Association, vol. 22(2), pages 133-154, Spring.
  22. Lambertini, Luca, 1997. "Unicity of the equilibrium in the unconstrained Hotelling model," Regional Science and Urban Economics, Elsevier, vol. 27(6), pages 785-798, November.
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Cited by:
  1. Matthew Gentzkow & Jesse M. Shapiro & Michael Sinkinson, 2012. "Competition and Ideological Diversity: Historical Evidence from US Newspapers," NBER Working Papers 18234, National Bureau of Economic Research, Inc.
  2. Anderson, Simon P. & Foros, Øystein & Kind, Hans Jarle, 2012. "Product quality, competition, and multi-purchasing," Discussion Papers 2012/9, Department of Business and Management Science, Norwegian School of Economics.

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