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News Aggregators and Competition Among Newspapers in the Internet

  • Esfahani, Nikrooz
  • Jeon, Doh-Shin
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    We study how the presence of a news aggregator affects quality choices of newspapers competing on the Internet. To provide a microfoundation for the role of the aggregator, we build a model of multiple issues where each newspaper chooses quality on each issue. This model captures the "business-stealing effect" and the "readership expansion effect" of the aggregator. We find that the presence of the aggregator leads newspapers to specialize in news coverage, changes quality choices from strategic substitutes to strategic complements and is likely to increase the quality of newspapers and social welfare, with an ambiguous effect on newspapers’ profits.

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    Paper provided by Institut d'Économie Industrielle (IDEI), Toulouse in its series IDEI Working Papers with number 770.

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    Date of creation: 01 Apr 2013
    Date of revision: 16 Jul 2014
    Handle: RePEc:ide:wpaper:27049
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    1. Doh-Shin Jeon & Jean-Charles Rochet, 2010. "The Pricing of Academic Journals: A Two-Sided Market Perspective," American Economic Journal: Microeconomics, American Economic Association, vol. 2(2), pages 222-55, May.
    2. Jeon, Doh-Shin & Menicucci, Domenico, 2009. "Interconnection among Academic Journal Websites: Multilateral versus Bilateral Interconnection," TSE Working Papers 09-102, Toulouse School of Economics (TSE).
    3. Joan Calzada & Guillem Ordóñez, 2012. "Competition in the news industry: fighting aggregators with versions and links," Working Papers 12-22, NET Institute.
    4. Chrysanthos Dellarocas & Zsolt Katona & William Rand, 2010. "Media, Aggregators and the Link Economy: Strategic Hyperlink Formation in Content Networks," Working Papers 10-13, NET Institute.
    5. Susan Athey & Emilio Calvano & Joshua S. Gans, 2014. "The Impact of the Internet on Advertising Markets for News Media," CSEF Working Papers 379, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    6. Anderson, Simon P. & Foros, Øystein & Kind, Hans Jarle & Peitz, Martin, 2012. "Media market concentration, advertising levels, and ad prices," International Journal of Industrial Organization, Elsevier, vol. 30(3), pages 321-325.
    7. Peitz, Martin & Valletti, Tommaso M., 2008. "Content and advertising in the media: Pay-tv versus free-to-air," International Journal of Industrial Organization, Elsevier, vol. 26(4), pages 949-965, July.
    8. James Rutt, 2011. "Aggregators and the News Industry: Charging for Access to Content," Working Papers 11-19, NET Institute, revised Sep 2011.
    9. Kroft, Kory & Pope, Devin G., 2012. "Does Online Search Crowd Out Traditional Search and Improve Matching Efficiency? Evidence from Craigslist," CLSSRN working papers clsrn_admin-2012-35, Vancouver School of Economics, revised 30 Nov 2012.
    10. Crampes, Claude & Haritchabalet, Carole & Jullien, Bruno, 2006. "Advertising, Competition and Entry in Media Industries," IDEI Working Papers 374, Institut d'Économie Industrielle (IDEI), Toulouse.
    11. George, Lisa M. & Hogendorn, Christiaan, 2012. "Aggregators, search and the economics of new media institutions," Information Economics and Policy, Elsevier, vol. 24(1), pages 40-51.
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