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Semi-collusion in media markets

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  • Dewenter, Ralf
  • Haucap, Justus
  • Wenzel, Tobias

Abstract

This paper explores the effects that collusion can have in newspaper markets where firms compete for advertising as well as for readership. We compare three modes of competition: i) competition in the advertising and the reader market, ii) semi-collusion over advertising (with competition in the reader market), and iii) (full) collusion in both the advertising and the reader market. We find that semi-collusion leads to less advertising (but higher advertising prices) and lower copy prices which is beneficial for readers. Under certain circumstances, semi-collusion may even benefit advertisers as newspaper circulation is higher. In addition, total welfare may rise due to semi-collusion. Results under full collusion are ambiguous. However, even under full collusion newspaper copy prices may decrease and welfare may increase. --

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Bibliographic Info

Paper provided by Heinrich‐Heine‐Universität Düsseldorf, Düsseldorf Institute for Competition Economics (DICE) in its series DICE Discussion Papers with number 11.

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Date of creation: 2010
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Handle: RePEc:zbw:dicedp:11

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Keywords: Media Markets; Collusion; Two-Sided Markets;

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References

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  1. Peitz, Martin & Valletti, Tommaso, 2004. "Content and Advertising in the Media: Pay-TV versus Free-To-Air," CEPR Discussion Papers, C.E.P.R. Discussion Papers 4771, C.E.P.R. Discussion Papers.
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Citations

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Cited by:
  1. Stühmeier Torben & Wenzel Tobias, 2012. "Regulating Advertising in the Presence of Public Service Broadcasting," Review of Network Economics, De Gruyter, De Gruyter, vol. 11(2), pages 1-23, June.
  2. Gu, Yiquan & Wenzel, Tobias, 2012. "Transparency, entry, and productivity," Economics Letters, Elsevier, Elsevier, vol. 115(1), pages 7-10.
  3. Filistrucchi, L. & Antonielli, M., 2012. "Collusion and the Political Differentiation of Newspapers," Discussion Paper, Tilburg University, Tilburg Law and Economic Center 2012-014, Tilburg University, Tilburg Law and Economic Center.
  4. 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.
  5. Christin, Clémence, 2011. "Entry deterrence through cooperative R&D over-investment," DICE Discussion Papers 38, Heinrich‐Heine‐Universität Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
  6. Dewenter, Ralf & Heimeshoff, Ulrich, 2011. "Media Bias and Advertising: Evidence from German Car Magazines," Annual Conference 2011 (Frankfurt, Main): The Order of the World Economy - Lessons from the Crisis 48691, Verein für Socialpolitik / German Economic Association.
  7. Haucap, Justus & Herr, Annika & Frank, Björn, 2011. "In vino veritas: Theory and evidence on social drinking," DICE Discussion Papers 37, Heinrich‐Heine‐Universität Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).

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