Econometric Diagnosis of Competitive Localisation: An Application to the UK National Daily Newspaper Market
This paper applies an econometric test of competitive localisation derived by Schmalensee (1985) to the UK national daily newspaper market. The test uses data on market shares, advertising and prices to distinguish between localised and generalised competition. The first stage of the test establishes whether generalised (symmetric) competition can be identified. If this hypothesis is rejected, further testing is required to provide evidence of competitive localisation. As in Schmalensee's own application, the results obtained decisively reject the symmetric model but are unable to confirm localisation.
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