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Economic Effects of Media Concentration: Estimates from a Model of the Newspaper Firm


  • Dertouzos, James N
  • Trautman, William B


By specifying and estimating a five-equation model of newspaper operations, this paper provides evidence useful for addressing several issues concerning media concentration. On the cost side, the results indicate that there exist significant scale economies in the production of circulation and space. On the other hand, the evidence suggests that chain newspapers can not produce output more efficiently than independents, all things equal. On the demand side, rival newspapers located in contiguous geographic markets appear to have an important competitive effect on the demand for circulation. However, broadcast stations do not seem to affect demand for newspaper advertising and circulation. Copyright 1990 by Blackwell Publishing Ltd.

Suggested Citation

  • Dertouzos, James N & Trautman, William B, 1990. "Economic Effects of Media Concentration: Estimates from a Model of the Newspaper Firm," Journal of Industrial Economics, Wiley Blackwell, vol. 39(1), pages 1-14, September.
  • Handle: RePEc:bla:jindec:v:39:y:1990:i:1:p:1-14

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    References listed on IDEAS

    1. Porter, Michael E, 1976. "Interbrand Choice, Media Mix and Market Performance," American Economic Review, American Economic Association, vol. 66(2), pages 398-406, May.
    2. Nickell, Stephen J & Metcalf, David, 1978. "Monopolistic Industries and Monopoly Profits or, Are Kellogg's Cornflakes Overpriced?," Economic Journal, Royal Economic Society, vol. 88(350), pages 254-268, June.
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    5. Cowling, Keith & Waterson, Michael, 1976. "Price-Cost Margins and Market Structure," Economica, London School of Economics and Political Science, vol. 43(171), pages 267-274, August.
    6. Connor, John M & Peterson, Everett B, 1992. "Market-Structure Determinants of National Brand-Private Label Price Differences of Manufactured Food Products," Journal of Industrial Economics, Wiley Blackwell, vol. 40(2), pages 157-171, June.
    7. A. P. Lerner, 1934. "The Concept of Monopoly and the Measurement of Monopoly Power," Review of Economic Studies, Oxford University Press, vol. 1(3), pages 157-175.
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    Cited by:

    1. Gabszewicz, J.J. & Garella, P.G. & Sonnac, N., 2007. "Newspapers' market shares and the theory of the circulation spiral," Information Economics and Policy, Elsevier, vol. 19(3-4), pages 405-413, October.
    2. Charles Romeo & Russell Pittman & Norman Familant, 2003. "Do Newspaper JOAs Charge Monopoly Advertising Rates?," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 22(2), pages 121-138, March.
    3. Anderson, Simon P. & Gabszewicz, Jean J., 2006. "The Media and Advertising: A Tale of Two-Sided Markets," Handbook of the Economics of Art and Culture, Elsevier.
    4. Ramboll & The Evaluation Partnership & Europe Economics, 2015. "Economic Study on Publications on all Physical Means of Support and Electronic Publications in the context of VAT," Taxation Studies 0057, Directorate General Taxation and Customs Union, European Commission.
    5. George, Lisa, 2007. "What's fit to print: The effect of ownership concentration on product variety in daily newspaper markets," Information Economics and Policy, Elsevier, vol. 19(3-4), pages 285-303, October.
    6. Matthew Gentzkow & Jesse M. Shapiro & Michael Sinkinson, 2014. "Competition and Ideological Diversity: Historical Evidence from US Newspapers," American Economic Review, American Economic Association, vol. 104(10), pages 3073-3114, October.
    7. Depken II, Craig A., 2004. "Audience characteristics and the price of advertising in a circulation industry: evidence from US magazines," Information Economics and Policy, Elsevier, vol. 16(2), pages 179-196, June.
    8. Kaiser, Ulrich & Wright, Julian, 2006. "Price structure in two-sided markets: Evidence from the magazine industry," International Journal of Industrial Organization, Elsevier, vol. 24(1), pages 1-28, January.
    9. Jacco Hakfoort & Jürgen Weigand, 2000. "Commercial publishing - a quiet life? Market power and performance on the Dutch market for consumer magazines," CPB Research Memorandum 174, CPB Netherlands Bureau for Economic Policy Analysis.
    10. Asplund, Marcus & Eriksson, Rickard & Strand, Niklas, 2001. "Prices, Margins and Liquidity Constraints: Swedish Newspapers 1990-1996," SSE/EFI Working Paper Series in Economics and Finance 470, Stockholm School of Economics.
    11. Ernesto Schargrodsky, 2002. "The Effect of Product Market Competition on Capital Structure: Empirical Evidence from the Newspaper Industry," Business School Working Papers veintiocho, Universidad Torcuato Di Tella.
    12. Häckner, Jonas & Nyberg, Sten, 2000. "Price Competition, Advertising and Media Market Concentration," Research Papers in Economics 2000:3, Stockholm University, Department of Economics.
    13. Lapo Filistrucchi, 2005. "The Impact of Internet on the Market for Daily Newspapers in Italy," Economics Working Papers ECO2005/12, European University Institute.
    14. C. Bush & Paul Zimmerman, 2010. "Media Mergers with Preference Externalities and Their Implications for Content Diversity, Consumer Welfare, and Policy," Journal of Industry, Competition and Trade, Springer, vol. 10(2), pages 105-133, June.
    15. Lisa George & Joel Waldfogel, 2000. "Who Benefits Whom in Daily Newspaper Markets?," NBER Working Papers 7944, National Bureau of Economic Research, Inc.
    16. Balmer, Roberto, 2013. "Entry and Competition in Local Newspaper Retail Markets - When two are enough," MPRA Paper 54079, University Library of Munich, Germany.
    17. Kekezi, Orsa & Mellander, Charlotta, 2017. "Geography and Media – Does a Local Editorial Office Increase the Consumption of Local News?," Working Paper Series in Economics and Institutions of Innovation 447, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
    18. Ulrich Kaiser, 2004. "An Estimated Model of the German Magazine Market," CIG Working Papers SP II 2004-07, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
    19. Fu, W. Wayne, 2003. "Multimarket contact of US newspaper chains: circulation competition and market coordination," Information Economics and Policy, Elsevier, vol. 15(4), pages 501-519, December.
    20. Jorge Ferrando & Jean J. Gabszewicz & Didier Laussel & Nathalie Sonnac, 2008. "Intermarket network externalities and competition: An application to the media industry," International Journal of Economic Theory, The International Society for Economic Theory, vol. 4(3), pages 357-379.

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