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Assessing Unilateral Merger Effects In A Two-Sided Market: An Application To The Dutch Daily Newspaper Market

Author

Listed:
  • Lapo Filistrucchi
  • Tobias J. Klein
  • Thomas O. Michielsen

Abstract

We compare different methods to assess unilateral merger effects in a two-sided market by applying them to a hypothetical merger in the Dutch newspaper industry. We first specify and estimate a structural model of demand for differentiated products in both the readership and the advertising sides of the market. This allows us to recover price elasticities and indirect network effects. Marginal costs are then recovered from an oligopoly model of the supply side. We use these estimates of price elasticities, network effects, and marginal costs to perform a concentration analysis based on the Herfindahl-Hirschmann index, to conduct a small but significant non-transitory increase in price test, to measure upward pricing pressure, and to run a full merger simulation.

Suggested Citation

  • Lapo Filistrucchi & Tobias J. Klein & Thomas O. Michielsen, 2012. "Assessing Unilateral Merger Effects In A Two-Sided Market: An Application To The Dutch Daily Newspaper Market," Journal of Competition Law and Economics, Oxford University Press, vol. 8(2), pages 297-329.
  • Handle: RePEc:oup:jcomle:v:8:y:2012:i:2:p:297-329.
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    File URL: http://hdl.handle.net/10.1093/joclec/nhs012
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    References listed on IDEAS

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    1. Lapo Filistrucchi & Damien Geradin & Eric van Damme & Pauline Affeldt, 2014. "Market Definition In Two-Sided Markets: Theory And Practice," Journal of Competition Law and Economics, Oxford University Press, vol. 10(2), pages 293-339.
    2. Stephen W. Salant & Sheldon Switzer & Robert J. Reynolds, 1983. "Losses From Horizontal Merger: The Effects of an Exogenous Change in Industry Structure on Cournot-Nash Equilibrium," The Quarterly Journal of Economics, Oxford University Press, vol. 98(2), pages 185-199.
    3. Minjae Song, 2013. "Estimating Platform Market Power in Two-Sided Markets with an Application to Magazine Advertising," 2013 Meeting Papers 1264, Society for Economic Dynamics.
    4. 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.
    5. Ambarish Chandra & Allan Collard-Wexler, 2009. "Mergers in Two-Sided Markets: An Application to the Canadian Newspaper Industry," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 18(4), pages 1045-1070, December.
    6. Sonia Jaffe & E. Glen Weyl, 2013. "The First-Order Approach to Merger Analysis," American Economic Journal: Microeconomics, American Economic Association, vol. 5(4), pages 188-218, November.
    7. 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.
    8. Przemyslaw Jeziorski, 2010. "Merger enforcement in two-sided markets," Economics Working Paper Archive 570, The Johns Hopkins University,Department of Economics.
    9. Lapo Filistrucchi & Tobias Klein & Thomas Michielsen, 2010. "Merger Simulation in a Two-Sided Market: The Case of the Dutch Daily Newspapers," Working Papers 10-15, NET Institute.
    10. Kaiser, Ulrich & Song, Minjae, 2009. "Do media consumers really dislike advertising? An empirical assessment of the role of advertising in print media markets," International Journal of Industrial Organization, Elsevier, vol. 27(2), pages 292-301, March.
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    Citations

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    Cited by:

    1. Edmond Baranes & Thomas Cortade & Andreea Cosnita-Langlais, 2014. "Merger Control on Two-Sided Markets: Is There Need for an Efficiency Defense?," Working Papers hal-01830016, HAL.
    2. Stefan Behringer & Lapo Filistrucchi, 2015. "Areeda–Turner in Two-Sided Markets," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 46(3), pages 287-306, May.
    3. Lapo Filistrucchi & Tobias J. Klein, 2013. "Price Competition in Two-Sided Markets with Heterogeneous Consumers and Network Effects," Working Papers 13-20, NET Institute.
    4. Filistrucchi, L. & Geradin, D.A.A.G. & van Damme, E.E.C., 2012. "Identifying Two-Sided Markets," Discussion Paper 2012-008, Tilburg University, Tilburg Law and Economic Center.
    5. Ivaldi, Marc & Muller-Vibes, Catherine, 2018. "The Differentiated Effect of Advertising on Readership: Evidence from a Two-Sided Market Approach," TSE Working Papers 18-900, Toulouse School of Economics (TSE).
    6. repec:kap:revind:v:54:y:2019:i:3:d:10.1007_s11151-018-9650-z is not listed on IDEAS
    7. Edmond Baranes & Thomas Cortade & Andreea Cosnita-Langlais, 2014. "Merger Control on Two-Sided Markets: Is There Need for an Efficiency Defense?," Working Papers hal-01830016, HAL.
    8. repec:kap:mktlet:v:29:y:2018:i:3:d:10.1007_s11002-018-9464-7 is not listed on IDEAS
    9. David Flath, 2012. "Japanese Newspapers," ISER Discussion Paper 0850, Institute of Social and Economic Research, Osaka University.
    10. Geoffrey Brooke & Lydia Cheung, 2018. "An Empirical Analysis of Competition in Print Adversiting among Paid and Free Newspapers," Working Papers 2018-07, Auckland University of Technology, Department of Economics.
    11. David S. Evans & Richard Schmalensee, 2013. "The Antitrust Analysis of Multi-Sided Platform Businesses," NBER Working Papers 18783, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media

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