Who Affects Whom in Daily Newspaper Markets?
When consumers share similar preferences, additional consumers will bring forth products that confer positive "preference externalities" on others. However, if distinct groups of consumers have substantially different preferences, the groups bring forth products with more appeal to themselves and less appeal to others. We document that in their capacity as daily newspaper consumers, blacks and whites are more likely to buy daily newspapers in markets with larger black and white populations, respectively. Similar results hold for Hispanics and non-Hispanics, but not by education, income, or age. We provide evidence that product positioning underlies our results.
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