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Semi-collusion in media markets

  • Dewenter, Ralf
  • Haucap, Justus
  • Wenzel, Tobias

Abstract This paper explores the effects that collusion can have in newspaper markets where firms compete for advertising as well as for readership. We compare three modes of competition: (i) competition in the advertising and the reader market, (ii) semi-collusion over advertising (with competition in the reader market), and (iii) (full) collusion in both the advertising and the reader market. We find that semi-collusion leads to less advertising (but higher advertising prices) and lower copy prices which is beneficial for readers. Under certain circumstances, semi-collusion may even benefit advertisers as newspaper circulation is higher. In addition, total welfare may rise due to semi-collusion. Results under full collusion are ambiguous. However, even under full collusion newspaper copy prices may decrease and welfare may increase.

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Article provided by Elsevier in its journal International Review of Law and Economics.

Volume (Year): 31 (2011)
Issue (Month): 2 (June)
Pages: 92-98

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Handle: RePEc:eee:irlaec:v:31:y:2011:i:2:p:92-98
Contact details of provider: Web page: http://www.elsevier.com/locate/irle

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