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Market Definition in the Printed Media Industry: Theory and Practice

Author

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  • Argentesi, Elena
  • Ivaldi, Marc

Abstract

This paper first discusses how the market is delineated in some recent antitrust cases in the printed media industry. It evaluates the extent to which the main features of the industry are incorporated into the analysis and affect market definition. In addition we argue that an econometric analysis that does not incorporate these features can lead to biased estimates of elasticities. As demand substitution is a crucial element for defining market, bad estimates of elasticities could blur the boundaries of relevant markets. Second we propose a simple model that encompasses these features and in particular the two-sidedness of the market. Thirdly, we review some empirical papers that analyse the issue of demand estimation in printed media. Finally, we perform a statistical estimation on a dataset of magazines in order to provide a measure of the possible bias that could arise in the estimation of elasticities when one does not use a proper model.

Suggested Citation

  • Argentesi, Elena & Ivaldi, Marc, 2005. "Market Definition in the Printed Media Industry: Theory and Practice," CEPR Discussion Papers 5096, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:5096
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    References listed on IDEAS

    as
    1. Ivaldi, Marc & Lörincz, Szabolcs, 2005. "A Full Equilibrium Relevant Market Test: Application to Computer Servers," IDEI Working Papers 341, Institut d'Économie Industrielle (IDEI), Toulouse.
    2. 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.
    3. GABSZEWICZ, Jean & LAUSSEL, Didier & SONNAC, Nathalie, 2002. "Concentration in the press industry and the theory of the "circulation spiral"," CORE Discussion Papers 2002064, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    4. Elena Argentesi, 2004. "Demand Estimation for Italian Newspapers: The Impact of Weekly Supplements," Economics Working Papers ECO2004/28, European University Institute.
    5. 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.
    6. Motta,Massimo, 2004. "Competition Policy," Cambridge Books, Cambridge University Press, number 9780521016919, April.
    7. Mark Armstrong, 2006. "Competition in two‐sided markets," RAND Journal of Economics, RAND Corporation, vol. 37(3), pages 668-691, September.
    8. Jean-Charles Rochet & Jean Tirole, 2014. "Platform Competition in Two-Sided Markets," CPI Journal, Competition Policy International, vol. 10.
    9. Nevo, Aviv, 2001. "Measuring Market Power in the Ready-to-Eat Cereal Industry," Econometrica, Econometric Society, vol. 69(2), pages 307-342, March.
    10. Kaiser, Ulrich, 2001. "The effects of website provision on the demand for German women's magazines," ZEW Discussion Papers 01-69, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    11. Ivaldi, Marc & Verboven, Frank, 2005. "Quantifying the effects from horizontal mergers in European competition policy," International Journal of Industrial Organization, Elsevier, vol. 23(9-10), pages 669-691, December.
    12. Steven T. Berry, 1994. "Estimating Discrete-Choice Models of Product Differentiation," RAND Journal of Economics, The RAND Corporation, vol. 25(2), pages 242-262, Summer.
    13. Ulrich Kaiser, 2004. "An Estimated Model of the German Magazine Market," CIG Working Papers SP II 2004-07, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Ralf Dewenter & Ulrich Kaiser, 2006. "Horizontale Fusionen auf zweiseitigen Märkten am Beispiel von Printmedien," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 7(3), pages 335-353, August.
    2. Balmer, Roberto, 2013. "Entry and Competition in Local Newspaper Retail Markets - When two are enough," MPRA Paper 54079, University Library of Munich, Germany.
    3. Senay Sokullu, 2012. "Nonparametric Analysis of Two-Sided Markets," Bristol Economics Discussion Papers 12/628, Department of Economics, University of Bristol, UK.
    4. Vincenzo Visco Comandini, 2007. "Servizi postali," Rivista di Politica Economica, SIPI Spa, vol. 97(4), pages 257-314, July-Augu.

    More about this item

    Keywords

    market definition; printed media; two-sided markets;

    JEL classification:

    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media

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