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Trading facts: Arrow's fundamental paradox and the emergence of global news networks, 1750-1900

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  • Bakker, Gerben

Abstract

The nineteenth century saw the advent of news agencies that became well-coordinated global organisations with large networks of correspondents, such as Reuters, Havas, Wolff-Continental and Associated Press. Essential features of these agencies were substantial fixed and sunk set-up costs, high fixed operating costs, a marginal cost of supplying news to an additional customer of virtually zero, and the quasi-public good character of information, which had implications for the organisational form, marketing and pricing. To solve Arrow’s fundamental paradox of information, agencies adopted subscriptions, because this made the marginal price of news zero. The news networks were operated by unique organisations whose evolution interacted with new technologies. The paper investigates how the news agencies emerged, whether and how they co-evoluted with infrastructure firms, what business models they pioneered, how they developed/discovered these models, and how they became encapsulated in an oligopolistic industry structure in the course of the nineteenth century.

Suggested Citation

  • Bakker, Gerben, 2007. "Trading facts: Arrow's fundamental paradox and the emergence of global news networks, 1750-1900," Economic History Working Papers 22519, London School of Economics and Political Science, Department of Economic History.
  • Handle: RePEc:ehl:wpaper:22519
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    File URL: http://eprints.lse.ac.uk/22519/
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    References listed on IDEAS

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    1. Field, Alexander J., 1987. "Modern Business Enterprise as a Capital-Saving Innovation," The Journal of Economic History, Cambridge University Press, vol. 47(02), pages 473-485, June.
    2. Shmanske, Stephen, 1986. "News as a Public Good: Cooperative Ownership, Price Commitments, and the Success of the Associated Press," Business History Review, Cambridge University Press, vol. 60(01), pages 55-80, March.
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    Cited by:

    1. Bakker, Gerben, 2014. "How they made news pay: news traders’ quest for crisis-resistant business models," Economic History Working Papers 59304, London School of Economics and Political Science, Department of Economic History.
    2. Bakker, Gerben, 2012. "Adopting the rights-based model: music multinationals and local music industries since 1945," Economic History Working Papers 47507, London School of Economics and Political Science, Department of Economic History.
    3. Bakker, Gerben, 2014. "Soft power: the media industries in Britain since 1870," Economic History Working Papers 56333, London School of Economics and Political Science, Department of Economic History.
    4. Gerben Bakker, 2011. "Leisure Time, Cinema and the Structure of Household Entertainment Expenditure, 1890–1940," Chapters,in: Handbook on the Economics of Leisure, chapter 16 Edward Elgar Publishing.
    5. Bakker, Gerben, 2012. "Sunk costs and the dynamics of creative industries," Economic History Working Papers 49081, London School of Economics and Political Science, Department of Economic History.

    More about this item

    JEL classification:

    • B1 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925

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