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Who Benefits Whom in Daily Newspaper Markets?

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  • Lisa George
  • Joel Waldfogel

Abstract

Markets are generally thought to avoid problems, such as tyranny of the majority, that arise when allocation is accomplished through collective processes. Yet, with fixed costs, differentiated product markets deliver only products desired by substantial constituencies. When consumers share similar preferences, then additional consumers will bring forth additional products or improve the attributes or position of existing products and the consumers confer positive pecuniary preference externalities' on each other. However, if distinct groups of consumers have substantially different preferences, the groups can hurt each other through product markets. We document the pattern of preference externalities among black and white consumers of daily newspapers in the US. We find that, in their capacity as newspaper consumers, members of each group benefits themselves and either harm, or fail to benefit, each other through the product market. We document that product positioning provides the mechanism underlying our results. While Friedman (1962) argues that the use of political channels tends to strain the social cohesion essential for a stable society,' while, by contrast, widespread use of the market reduces the strain on the social fabric by rendering conformity unnecessary,' mounting evidence on media markets suggests otherwise.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 7944.

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Date of creation: Oct 2000
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Publication status: published as George, Lisa and Joel Waldfogel. "Who Affects Whom In Daily Newspaper Markets?," Journal of Political Economy, 2003, v111(4,Aug), 765-784.
Handle: RePEc:nbr:nberwo:7944

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  1. anonymous, 1982. "Communications," Management Science, INFORMS, INFORMS, vol. 28(12), pages 1471-1475, December.
  2. Spence, A Michael & Owen, Bruce, 1977. "Television Programming, Monopolistic Competition, and Welfare," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 91(1), pages 103-26, February.
  3. Thompson, R Stephen, 1989. "Circulation versus Advertiser Appeal in the Newspaper Industry: An Empirical Investigation," Journal of Industrial Economics, Wiley Blackwell, Wiley Blackwell, vol. 37(3), pages 259-71, March.
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  7. Economides, Nicholas, 1989. "Quality variations and maximal variety differentiation," Regional Science and Urban Economics, Elsevier, Elsevier, vol. 19(1), pages 21-29, February.
  8. Robert P. Rogers & John R. Woodbury, 1996. "Market Structure, Program Diversity, And Radio Audience Size," Contemporary Economic Policy, Western Economic Association International, Western Economic Association International, vol. 14(1), pages 81-91, 01.
  9. Bockem, Sabine, 1994. "A Generalized Model of Horizontal Product Differentiation," Journal of Industrial Economics, Wiley Blackwell, Wiley Blackwell, vol. 42(3), pages 287-98, September.
  10. anonymous, 1982. "Communication," Management Science, INFORMS, INFORMS, vol. 28(3), pages 337-337, March.
  11. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, American Economic Association, vol. 67(3), pages 297-308, June.
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  13. Spence, Michael, 1976. "Product Selection, Fixed Costs, and Monopolistic Competition," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 43(2), pages 217-35, June.
  14. Beebe, Jack H, 1977. "Institutional Structure and Program Choices in Television Markets," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 91(1), pages 15-37, February.
  15. Steven T. Berry & Joel Waldfogel, 1999. "Mergers, Station Entry, and Programming Variety in Radio Broadcasting," NBER Working Papers 7080, National Bureau of Economic Research, Inc.
  16. David Genesove, 1999. "The Adoption of Offset Presses in the Daily Newspaper Industry in the United States," NBER Working Papers 7076, National Bureau of Economic Research, Inc.
  17. Steven T. Berry & Joel Waldfogel, 1999. "Free Entry and Social Inefficiency in Radio Broadcasting," RAND Journal of Economics, The RAND Corporation, vol. 30(3), pages 397-420, Autumn.
  18. Spence, Michael, 1976. "Product Differentiation and Welfare," American Economic Review, American Economic Association, American Economic Association, vol. 66(2), pages 407-14, May.
  19. Rosse, James N, 1970. "Estimating Cost Function Parameters without Using Cost Data: Illustrated Methodology," Econometrica, Econometric Society, Econometric Society, vol. 38(2), pages 256-75, March.
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Cited by:
  1. Glazer, Amihai & Gradstein, Mark & Ranjan, Priya, 2003. "Consumption variety and urban agglomeration," Regional Science and Urban Economics, Elsevier, Elsevier, vol. 33(6), pages 653-661, October.
  2. Simon P. Anderson & John McLaren, 2012. "Media Mergers And Media Bias With Rational Consumers," Journal of the European Economic Association, European Economic Association, European Economic Association, vol. 10(4), pages 831-859, 08.
  3. Simon P., ANDERSON & Jean J., GABSZEWICZ, 2005. "The media and advertising : a table of two-sided markets," Discussion Papers (ECON - Département des Sciences Economiques), Université catholique de Louvain, Département des Sciences Economiques 2005060, Université catholique de Louvain, Département des Sciences Economiques.
  4. Zhang, Wenhui & Shi, Guanming, 2012. "An Exploration of Product Choices in U.S. Biotech Corn Seed Market," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington, Agricultural and Applied Economics Association 124758, Agricultural and Applied Economics Association.
  5. Felix Oberholzer-Gee & Joel Waldfogel, 2006. "Media Markets and Localism: Does Local News en Español Boost Hispanic Voter Turnout?," NBER Working Papers 12317, National Bureau of Economic Research, Inc.
  6. Simon Loertscher & Gerd Muehlheusser, 2008. "Dynamic Location Games," Department of Economics - Working Papers Series, The University of Melbourne 1042, The University of Melbourne.
  7. Guido De Blasio, 2005. "Production Or Consumption? Disentangling The Skill-Agglomeration Connection," ERSA conference papers ersa05p648, European Regional Science Association.
  8. Felix Oberholzer-Gee & Joel Waldfogel, 2001. "Electoral Acceleration: The Effect of Minority Population on Minority Voter Turnout," NBER Working Papers 8252, National Bureau of Economic Research, Inc.
  9. Berry, Steven & Waldfogel, Joel, 2005. "Product Quality and Market Size," Working Papers, Yale University, Department of Economics 1, Yale University, Department of Economics.
  10. Loertscher, Simon & Muehlheusser, Gerd, 2008. "Global and local players in a model of spatial competition," Economics Letters, Elsevier, Elsevier, vol. 98(1), pages 100-106, January.
  11. Glazer, Amihai & Kondo, Hiroki, 2007. "Migration in search of good government," Regional Science and Urban Economics, Elsevier, Elsevier, vol. 37(6), pages 703-716, November.
  12. Guido de Blasio, 2006. "Production or consumption? Disentangling the skill-agglomeration connection," Temi di discussione (Economic working papers), Bank of Italy, Economic Research and International Relations Area 571, Bank of Italy, Economic Research and International Relations Area.
  13. Alberto Dalmazzo & Guido De Blasio, 2007. "Skill-Biased Agglomeration Effects and Amenities: Theory with an Application to Italian Cities," Department of Economics University of Siena, Department of Economics, University of Siena 503, Department of Economics, University of Siena.

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