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Advertising and the rise of the free daily newspapers

Author

Listed:
  • Jean J. , GABSZEWICZ

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Department of Economics)

  • Didier, LAUSSEL
  • Nathalie, SONNAC

Abstract

We analyze the competition between two newspapers in a vertical differentiation model where the qualities of the journals are determined endogenously in the first stage of the game. We show that when the advertising revenues per reader increase there is a critical value above which the quality of the low quality newspaper discontinuously falls while it become similtaneously a free newspaper. This is beneficial to the high quality journal and detrimental to the readers.

Suggested Citation

  • Jean J. , GABSZEWICZ & Didier, LAUSSEL & Nathalie, SONNAC, 2006. "Advertising and the rise of the free daily newspapers," Discussion Papers (ECON - Département des Sciences Economiques) 2006045, Université catholique de Louvain, Département des Sciences Economiques.
  • Handle: RePEc:ctl:louvec:2006045
    as

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    File URL: http://sites.uclouvain.be/econ/DP/IRES/2006-45.pdf
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    References listed on IDEAS

    as
    1. Gabszewicz, Jean J. & Laussel, Dider & Sonnac, Nathalie, 2001. "Press advertising and the ascent of the 'Pensee Unique'," European Economic Review, Elsevier, vol. 45(4-6), pages 641-651, May.
    2. Jaskold Gabszewicz, J. & Thisse, J. -F., 1979. "Price competition, quality and income disparities," Journal of Economic Theory, Elsevier, vol. 20(3), pages 340-359, June.
    3. Simon P. Anderson & Stephen Coate, 2005. "Market Provision of Broadcasting: A Welfare Analysis," Review of Economic Studies, Oxford University Press, vol. 72(4), pages 947-972.
    4. Esther Gal-Or & Anthony Dukes, 2003. "Minimum Differentiation in Commercial Media Markets," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 12(3), pages 291-325, September.
    5. Gabszewicz, Jean J & Laussel, Didier & Sonnac, Nathalie, 2002. " Press Advertising and the Political Differentiation of Newspapers," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 4(3), pages 317-334.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Advertising; Newspaper quality;

    JEL classification:

    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media

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