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

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Author Info
Kaiser, Ulrich
Wright, Julian

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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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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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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Rosse, James N, 1970. "Estimating Cost Function Parameters without Using Cost Data: Illustrated Methodology," Econometrica, Econometric Society, vol. 38(2), pages 256-75, March. [Downloadable!] (restricted)
  2. Marc Rysman, 2004. "Competition Between Networks: A Study of the Market for Yellow Pages," Review of Economic Studies, Blackwell Publishing, vol. 71(2), pages 483-512, 04. [Downloadable!] (restricted)
  3. Gabszewicz, Jean J. & Laussel, Dider & Sonnac, Nathalie, 2001. "Press advertising and the ascent of the 'Pensee Unique'," European Economic Review, Elsevier, vol. 45(4-6), pages 641-651, May. [Downloadable!] (restricted)
  4. Mark Armstrong Author-Email: mark.armstrong@ucl.ac.uk, 2006. "Competition in Two-Sided Markets," RAND Journal of Economics, The RAND Corporation, vol. 37(3), pages 668-691, Autumn.
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  5. ROCHET, Jean-Charles & TIROLE, Jean, 2003. "Platform Competition in Two-Sided Markets," IDEI Working Papers 152, Institut d'Économie Industrielle (IDEI), Toulouse. [Downloadable!]
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  6. 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.
  7. David S. Evans, 2003. "Some Empirical Aspects of Multi-Sided Platform Industries," Review of Network Economics, Concept Economics, vol. 2(3), pages 191-209, September. [Downloadable!]
  8. Thompson, R Stephen, 1989. "Circulation versus Advertiser Appeal in the Newspaper Industry: An Empirical Investigation," Journal of Industrial Economics, Blackwell Publishing, vol. 37(3), pages 259-71, March. [Downloadable!] (restricted)
  9. Ulrich Kaiser, 2002. "The Effects of Website Provision on the Demand for German Women's Magazines," NBER Working Papers 8806, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  10. Hausman, Jerry A. & Taylor, William E., 1981. "Panel data and unobservable individual effects," Journal of Econometrics, Elsevier, vol. 16(1), pages 155-155, May. [Downloadable!] (restricted)
  11. Dertouzos, James N & Trautman, William B, 1990. "Economic Effects of Media Concentration: Estimates from a Model of the Newspaper Firm," Journal of Industrial Economics, Blackwell Publishing, vol. 39(1), pages 1-14, September. [Downloadable!] (restricted)
  12. Hausman, Jerry A & Taylor, William E, 1981. "Panel Data and Unobservable Individual Effects," Econometrica, Econometric Society, vol. 49(6), pages 1377-98, November. [Downloadable!] (restricted)
  13. Berry, Steven & Levinsohn, James & Pakes, Ariel, 1995. "Automobile Prices in Market Equilibrium," Econometrica, Econometric Society, vol. 63(4), pages 841-90, July. [Downloadable!] (restricted)
  14. Doganoglu, Toker & Wright, Julian, 2006. "Multihoming and compatibility," International Journal of Industrial Organization, Elsevier, vol. 24(1), pages 45-67, January. [Downloadable!] (restricted)
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  15. Bucklin, Randolph E & Caves, Richard E & Lo, Andrew W, 1989. "Games of Survival in the U.S. Newspaper Industry," Applied Economics, Taylor and Francis Journals, vol. 21(5), pages 631-49, May.
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Marc Rysman, 2006. "An Empirical Analysis of Payment Card Usage," Boston University - Department of Economics - Working Papers Series WP2006-002, Boston University - Department of Economics. [Downloadable!]
  2. Verdier, Marianne, 2006. "Retail Payment Systems: What can we Learn from Two-Sided Markets?," MPRA Paper 2606, University Library of Munich, Germany. [Downloadable!]
  3. Anderson, Simon P & Gabszewicz, Jean Jaskold, 2005. "The Media and Advertising: A Tale of Two-Sided Markets," CEPR Discussion Papers 5223, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  4. Paul, BELLEFLAMME & Martin PEITZ, 2006. "Intermediation and investment incentives," Université catholique de Louvain, Département des Sciences Economiques Working Paper 2006048, Université catholique de Louvain, Département des Sciences Economiques. [Downloadable!]
    Other versions:
  5. ARGENTESI, Elena & IVALDI, Marc, 2005. "Market Definition in Printed Media Industry: Theory and Practice," IDEI Working Papers 376, Institut d'Économie Industrielle (IDEI), Toulouse. [Downloadable!]
  6. Christos Genakos & Tommaso Valletti, 2007. "Testing the "Waterbed" Effect in Mobile Telephony," CEP Discussion Papers dp0827, Centre for Economic Performance, LSE. [Downloadable!]
  7. Argentesi, Elena & Ivaldi, Marc, 2005. "Market Definition in the Printed Media Industry: Theory and Practice," CEPR Discussion Papers 5096, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  8. Kenneth S. Corts & Mara Lederman, 2007. "Software Exclusivity and the Scope of Indirect Network Effects in the U.S. Home Video Game Market," Working Papers 07-43, NET Institute, revised Nov 2007. [Downloadable!]
  9. Sharon Oster & Fiona Scott Morton, 2005. "Behavioral Biases Meet the Market: The Case of Magazine Subscription Prices," Advances in Economic Analysis & Policy, Berkeley Electronic Press, vol. 5(1), pages 1323-1323. [Downloadable!] (restricted)
  10. Andrea Galeotti & José Luis Moraga-González, 2008. "Platform Intermediation in a Market for Differentiated Products," Tinbergen Institute Discussion Papers 08-020/1, Tinbergen Institute. [Downloadable!]
    Other versions:
  11. Rattanasuda Poolsombat & Gianluigi Vernasca, 2006. "Partial Multihoming in Two-sided Markets," Discussion Papers 06/10, Department of Economics, University of York. [Downloadable!]
  12. Christos Genakos & Tommaso Valletti, 2008. "Testing the “Waterbed” Effect in Mobile Telephony," CEIS Research Paper 110, Tor Vergata University, CEIS, revised 11 Jul 2008. [Downloadable!]
  13. Elena Argentesi & Lapo Filistrucchi, 2005. "Estimating market power in a two-sided market: the case of newspapers," Economics Working Papers ECO2005/07, European University Institute. [Downloadable!]
    Other versions:
  14. Ulrich Kaiser, 2007. "Do Media Consumers Really Dislike Advertising? An Empirical Assessment of a Popular Assumption in Economic Theory," CIE Discussion Papers 2007-08, University of Copenhagen. Department of Economics. Centre for Industrial Economics. [Downloadable!]
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