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Commercial publishing - a quiet life? Market power and performance on the Dutch market for consumer magazines

Author

Listed:
  • Jacco Hakfoort

    (CPB Netherlands Bureau for Economic Policy Analysis)

  • Jürgen Weigand

    (CPB Netherlands Bureau for Economic Policy Analysis)

Abstract

The study analyses the Dutch market for consumer magazines. Magazines share a number of characteristics with other information goods: they are experience goods, non-rival, have high fixed and low marginal cost, and content can be subsidised or sponsored by advertising. We develop a simple theoretical model to show that, if readers value content, it is profit maximising for publishers to use pricing power in the advertising market to subsidise the price charged from readers. The empirical analysis is based on a panel data set of 71 Dutch magazines over the period 1990 - 1998. The regression results suggest that magazines with a higher circulation are indeed sold at lower newsstand prices, while ad rates tend to be higher for these magazines. The analysis of the market indicates that policy makers should be on the look-out for anti-competitive actions taking place in upstream or downstream markets.

Suggested Citation

  • Jacco Hakfoort & Jürgen Weigand, 2000. "Commercial publishing - a quiet life? Market power and performance on the Dutch market for consumer magazines," CPB Research Memorandum 174, CPB Netherlands Bureau for Economic Policy Analysis.
  • Handle: RePEc:cpb:resmem:174
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    References listed on IDEAS

    as
    1. Rosse, James N, 1970. "Estimating Cost Function Parameters without Using Cost Data: Illustrated Methodology," Econometrica, Econometric Society, vol. 38(2), pages 256-275, March.
    2. van Ours, J.C. & Abbring, J.H., 1994. "Selling news and advertising space: Economics of Dutch newspapers," Other publications TiSEM a1e76094-ffdd-4542-8280-8, Tilburg University, School of Economics and Management.
    3. Ferguson, James M, 1983. "Daily Newspaper Advertising Rates, Local Media Cross-Ownership, Newspaper Chains, and Media Competition," Journal of Law and Economics, University of Chicago Press, vol. 26(3), pages 635-654, October.
    4. Dertouzos, James N & Trautman, William B, 1990. "Economic Effects of Media Concentration: Estimates from a Model of the Newspaper Firm," Journal of Industrial Economics, Wiley Blackwell, vol. 39(1), pages 1-14, September.
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    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
    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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