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News Aggregators and Competition among Newspapers on the Internet

Listed author(s):
  • Doh-Shin Jeon
  • Nikrooz Nasr
Registered author(s):

    This paper studies how news aggregators affect the quality choices of newspapers competing on the Internet. To provide a micro-foundation for the role of the aggregator, we build a model of multiple issues where newspapers choose their quality on each issue. Our model captures well the main trade-off between the "business-stealing" effect and the "readership-expansion" effect. We find that the aggregator increases the quality only if the readership-expansion effect is large enough relative to the business-stealing effect. Using a condition obtained from empirical results, we find that the aggregator increases the quality and social welfare, but affects newspapers' profits ambiguously.

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    Article provided by American Economic Association in its journal American Economic Journal: Microeconomics.

    Volume (Year): 8 (2016)
    Issue (Month): 4 (November)
    Pages: 91-114

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    Handle: RePEc:aea:aejmic:v:8:y:2016:i:4:p:91-114
    Note: DOI: 10.1257/mic.20140151
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    1. 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.
    2. Lisa M. George & Christiaan Hogendorn, 2014. "Local News Online: Aggregators, Geo-Targeting and the Market for Local News," Economics Working Paper Archive at Hunter College 443, Hunter College Department of Economics.
    3. Chrysanthos Dellarocas & Zsolt Katona & William Rand, 2010. "Media, Aggregators and the Link Economy: Strategic Hyperlink Formation in Content Networks," Working Papers 10-13, NET Institute.
    4. Hyunho Kim & Konstantinos Serfes, 2006. "A LOCATION MODEL WITH PREFERENCE FOR VARIETY -super-," Journal of Industrial Economics, Wiley Blackwell, vol. 54(4), pages 569-595, December.
    5. Anderson, Simon P. & Foros, Øystein & Kind, Hans Jarle & Peitz, Martin, 2012. "Media market concentration, advertising levels, and ad prices," International Journal of Industrial Organization, Elsevier, vol. 30(3), pages 321-325.
    6. Chrysanthos Dellarocas & Zsolt Katona & William Rand, 2013. "Media, Aggregators, and the Link Economy: Strategic Hyperlink Formation in Content Networks," Management Science, INFORMS, vol. 59(10), pages 2360-2379, October.
    7. James Rutt, 2011. "Aggregators and the News Industry: Charging for Access to Content," Working Papers 11-19, NET Institute, revised Sep 2011.
    8. Joan Calzada & Guillem Ordóñez, 2012. "Competition in the news industry: fighting aggregators with versions and links," Working Papers 12-22, NET Institute.
    9. George, Lisa M. & Hogendorn, Christiaan, 2012. "Aggregators, search and the economics of new media institutions," Information Economics and Policy, Elsevier, vol. 24(1), pages 40-51.
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