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Circulations, Revenues, and Profits in a Newspaper Market with Fixed Advertising Costs

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  • Agostino Manduchi
  • Robert Picard

Abstract

This article investigates a model in which 2 newspapers compete between them for readers with differentiated preferences and advertise new products at a cost per reader that decreases as the circulation increases. The model can account for the empirical regularity that the revenues from advertising and the profits of the newspapers increase more than proportionally with the circulation. A complementary finding is that a larger number of potential advertisers lowers the profits of both newspapers.

Suggested Citation

  • Agostino Manduchi & Robert Picard, 2009. "Circulations, Revenues, and Profits in a Newspaper Market with Fixed Advertising Costs," Journal of Media Economics, Taylor & Francis Journals, vol. 22(4), pages 211-238.
  • Handle: RePEc:taf:jmedec:v:22:y:2009:i:4:p:211-238
    DOI: 10.1080/08997760903375902
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    Cited by:

    1. João Correia-da-Silva & Joana Resende, 2013. "Free daily newspapers: too strong incentives to print?," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 12(2), pages 113-130, August.

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