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Price Structure in Two-sided Markets: Evidence from the Magazine Industry?

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  • Kaiser, Ulrich
  • Wright, Julian

Abstract

We present and estimate a model of competition in a two-sided market: the market for magazine readership and advertising. Using data on magazines in Germany, we find evidence that magazines have properties of two-sided markets. The results are consistent with the perception that prices for readers are "subsidized" and magazines make most of their money from advertisers. Consistent with advertisers valuing readers more than readers value advertisements, our results imply that higher demand or lower costs on the reader side increase ad rates, but that higher demand or lower costs on the advertising side decrease cover prices. --

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Bibliographic Info

Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 04-80.

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Date of creation: 2004
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Handle: RePEc:zbw:zewdip:2885

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  8. Thompson, R S, 1984. "Structure and Conduct in Local Advertising Markets: The Case of Irish Provincial Newspapers," Journal of Industrial Economics, Wiley Blackwell, Wiley Blackwell, vol. 33(2), pages 241-49, December.
  9. Caillaud, Bernard & Jullien, Bruno, 2003. " Chicken & Egg: Competition among Intermediation Service Providers," RAND Journal of Economics, The RAND Corporation, vol. 34(2), pages 309-28, Summer.
  10. Kaiser, Ulrich, 2001. "The effects of website provision on the demand for German women's magazines," ZEW Discussion Papers, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research 01-69, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  11. Jerry HAUSMAN & Gregory LEONARD & J. Douglas ZONA, 1994. "Competitive Analysis with Differentiated Products," Annales d'Economie et de Statistique, ENSAE, issue 34, pages 159-180.
  12. Rochet, Jean-Charles & Tirole, Jean, 2003. "Platform Competition in Two-Sided Markets," IDEI Working Papers, Institut d'Économie Industrielle (IDEI), Toulouse 152, Institut d'Économie Industrielle (IDEI), Toulouse.
  13. Gabszewicz, Jean J. & Laussel, Dider & Sonnac, Nathalie, 2001. "Press advertising and the ascent of the 'Pensee Unique'," European Economic Review, Elsevier, Elsevier, vol. 45(4-6), pages 641-651, May.
  14. Berry, Steven & Levinsohn, James & Pakes, Ariel, 1995. "Automobile Prices in Market Equilibrium," Econometrica, Econometric Society, Econometric Society, vol. 63(4), pages 841-90, July.
  15. 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.
  16. Mark Armstrong, 2005. "Competition in Two-Sided Markets," Industrial Organization, EconWPA 0505009, EconWPA.
  17. Evans David S., 2003. "Some Empirical Aspects of Multi-sided Platform Industries," Review of Network Economics, De Gruyter, De Gruyter, vol. 2(3), pages 1-19, September.
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