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Prices and Network Eects in Two-Sided Markets: the Belgian Newspaper Industry

  • Van Cayseele, Patrick

    (Katholieke Universiteit Leuven, Belgium
    Universiteit Amsterdam, The Netherlands)

  • Vanormelingen, Stijn

    ()

    (Hogeschool-Universiteit Brussel (HUB), Belgium
    Katholieke Universiteit Leuven, Belgium)

This paper investigates the two-sided nature of the newspaper industry. We explicitly take into account cross network eects that exist between advertisers and newspaper readers. On one side, advertisers.demand for publicity space depends on the number of newspaper readers and their characteristics. On the other side, readers. Demand can be, positively or negatively, in.uenced by the number of advertisements. In addition, editors may own several newspapers and hence a variety of cross-market eects that result from changes in market prices exist. To estimate demand parameters for both sides of the market, a speci.c structural model is needed that takes into account those eects. We estimate network eects and price elasticities for Belgian newspaper publishers to assess market power and the degree of competition in the market, which experienced a large consolidation wave over the last decades. This allows us to evaluate a recent merger in the Belgian newspaper industry.

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Paper provided by Hogeschool-Universiteit Brussel, Faculteit Economie en Management in its series Working Papers with number 2009/06.

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Length: 36 pages
Date of creation: 26 Feb 2009
Date of revision:
Handle: RePEc:hub:wpecon:200906
Contact details of provider: Web page: http://research.hubrussel.be

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