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Estimating market power in a two-sided market: The case of newspapers

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  • Elena Argentesi

    (Dipartimento di Scienze Economiche, University of Bologna, Bologna, Italy)

  • Lapo Filistrucchi

    (Department of Economics, CenTER & TILEC, Tilburg University, Tilburg, The Netherlands; Dipartimento di Economia Politica, University of Siena, Siena, Italy)

Abstract

The newspaper industry is a two-sided market: the readers market and the advertising market are closely linked by inter-market network externalities. We estimate market power in the Italian newspaper industry by building a structural model which encompasses a demand estimation for differentiated products on both sides of the market and where profit maximization by the publishing firms takes into account the interaction between them. The question that we address is whether the observed price pattern is consistent with profit-maximizing behaviour by competing firms or is instead driven by some form of (tacit or explicit) coordinated practice. Copyright © 2007 John Wiley & Sons, Ltd.

Suggested Citation

  • Elena Argentesi & Lapo Filistrucchi, 2007. "Estimating market power in a two-sided market: The case of newspapers," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(7), pages 1247-1266.
  • Handle: RePEc:jae:japmet:v:22:y:2007:i:7:p:1247-1266
    DOI: 10.1002/jae.997
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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