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Newspapers and Advertising: The Effects of Ad-Valorem Taxation under Duopoly

Author

Listed:
  • Hans Jarle Kind

    (Norwegian School of Economics and Business Administration) Bergen, Norway)

  • Guttorm Schjelderup

    (Norwegian School of Economics and Business Administration) Bergen, Norway)

  • Frank Staehler

    (Department of Economics, University of Otago)

Abstract

Newspapers are two-sided platforms that sell their product both to readers and advertisers. Media firms in general, and newspapers in particular, are considered important providers of information, culture and language in most countries. Newspapers are therefore given preferential tax treatment. We show that lower ad valorem taxes lead newspapers to become more differentiated. Thereby the competitive pressure falls, possibly resulting in higher newspaper prices and reduced quality investments.

Suggested Citation

  • Hans Jarle Kind & Guttorm Schjelderup & Frank Staehler, 2006. "Newspapers and Advertising: The Effects of Ad-Valorem Taxation under Duopoly," Working Papers 0609, University of Otago, Department of Economics, revised Dec 2006.
    • Handle: RePEc:otg:wpaper:0609
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    File URL: http://www.business.otago.ac.nz/econ/research/discussionpapers/DP_0609.pdf
    File Function: First version, 2006
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    Keywords

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    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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