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Economic Perspectives on Media Mergers and Consolidation

Listed author(s):
  • Anthony J. Dukes

This article synthesizes several existing economic perspectives on the incentives for and consequences of media consolidation. Because of the two-sided nature of media markets, media mergers may lead to unexpected effects, which may not be deduced from common notions of industrial economics. We explore three such effects. In particular, we illustrate that media consolidation may lead to a reduced level of content diversity. Also, we present a recent theory that suggests conditions when a politically biased media may actually prefer competition. Finally, we illustrate how a media merger, or media consolidation in general, may lead to stiffer competition in the markets in which advertisers compete. This article is written for practitioners and regulators in the media and advertising industries. Furthermore, it is not intended to push a particular viewpoint or perspective. While non-technical, the arguments in the paper assume a background in introductory microeconomics. Dieser Artikel führt verschiedene ökonomische Sichtweisen auf Gründe für (zunehmende) Medienkonzentration und ihre Folgen zusammen. Da Medienmärkte durch die Existenz zweiseitiger Netzwerkeffekte geprägt sind, können Fusionen von Medienunternehmen zu unerwarteten Ergebnissen führen, die sich mithilfe der üblichen Konzepte der Industrieökonomik nicht erklären lassen. Im Mittelpunkt der Analyse stehen drei verschiedene Aspekte. Wir zeigen, dass (zunehmende) Medienkonzentration zu geringerer Programmvielfalt führen kann. Ferner präsentieren wir eine neue Theorie, die Bedingungen aufzeigt, unter denen es ein politisch einseitiges Medienunternehmen vorzieht, im Wettbewerb mit anderen Unternehmen zu stehen. Und schließlich zeigen wir, wie eine Medienfusion, oder generell (zunehmende) Medienkonzentration, zu stärkerem Wettbewerb in Werbemärkten führen kann. Dieser Artikel richtet sich sowohl an Praktiker der Medien- und Werbeindustrien als auch an den Gesetzgeber. Obwohl der Artikel selbst ohne eine formale Analyse auskommt, setzen die angeführten Argumente gute Kenntnisse grundlegender Mikroökonomie voraus.

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Article provided by DIW Berlin, German Institute for Economic Research in its journal Vierteljahrshefte zur Wirtschaftsforschung.

Volume (Year): 74 (2005)
Issue (Month): 3 ()
Pages: 38-48

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Handle: RePEc:diw:diwvjh:74-3-5
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  1. Anthony Dukes, 2004. "The Adverstising Market in a Product Oligopoly," Journal of Industrial Economics, Wiley Blackwell, vol. 52(3), pages 327-348, 09.
  2. Jack H. Beebe, 1977. "Institutional Structure and Program Choices in Television Markets," The Quarterly Journal of Economics, Oxford University Press, vol. 91(1), pages 15-37.
  3. Michael Spence & Bruce Owen, 1977. "Television Programming, Monopolistic Competition, and Welfare," The Quarterly Journal of Economics, Oxford University Press, vol. 91(1), pages 103-126.
  4. Simon P. Anderson & John McLaren, 2012. "Media Mergers And Media Bias With Rational Consumers," Journal of the European Economic Association, European Economic Association, vol. 10(4), pages 831-859, 08.
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