Price Wars in Two-Sided Markets: The case of the UK Quality Newspapers
AbstractThis paper investigates the price war in the UK quality newspaper industry in the 1990s. We build a model of the newspaper market which encompasses demand for differentiated products on both, the readers and advertisers side of the market, and profit maximization by four competing oligopolistic editors who recognize the existence of an indirect network effect of circulation on advertising demand. Editors choose first the political position, then simultaneously cover prices and advertising tariffs. We contribute to the literature on two-sided markets by endogenizing the political differentiation of newspapers in a model with more than two firms. We simulate changes to market structure in order to explore which of the candidate explanations is most likely to lie behind the observed price war.
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Bibliographic InfoPaper provided by NET Institute in its series Working Papers with number 09-26.
Length: 31 pages
Date of creation: Nov 2009
Date of revision: Dec 2009
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Web page: http://www.NETinst.org/
antitrust; two-sided markets; media markets; UK quality newspapers; predation; price wars; advertising; platforms.;
Find related papers by JEL classification:
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
- L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
- L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
- L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
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- Sagit Bar-Gill, 2013. "Game of Platforms: Strategic Expansion in Two-Sided Markets," Working Papers 13-12, NET Institute.
- Lapo Filistrucchi & Damien Geradin & Eric van Damme, 2012.
"Identifying Two-Sided Markets,"
Working Papers Series
wp2012_01.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze dell'Economia e Dell'Impresa.
- Senay Sokullu, 2012. "Nonparametric Analysis of Two-Sided Markets," Bristol Economics Discussion Papers 12/628, Department of Economics, University of Bristol, UK.
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