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Semi-collusion in media markets

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  • Dewenter, Ralf
  • Haucap, Justus
  • Wenzel, Tobias

Abstract

This paper explores the effects that collusion can have in newspaper markets where firms compete for advertising as well as for readership. We compare three modes of competition: i) competition in the advertising and the reader market, ii) semi-collusion over advertising (with competition in the reader market), and iii) (full) collusion in both the advertising and the reader market. We find that semi-collusion leads to less advertising (but higher advertising prices) and lower copy prices which is beneficial for readers. Under certain circumstances, semi-collusion may even benefit advertisers as newspaper circulation is higher. In addition, total welfare may rise due to semi-collusion. Results under full collusion are ambiguous. However, even under full collusion newspaper copy prices may decrease and welfare may increase.

Suggested Citation

  • Dewenter, Ralf & Haucap, Justus & Wenzel, Tobias, 2010. "Semi-collusion in media markets," DICE Discussion Papers 11, University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
  • Handle: RePEc:zbw:dicedp:11
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    Cited by:

    1. Lefouili, Yassine & Pinho, Joana, 2020. "Collusion between two-sided platforms," International Journal of Industrial Organization, Elsevier, vol. 72(C).
    2. Simon P. Anderson & Bruno Jullien, 2015. "The advertising-financed business model in two-sided media markets," Post-Print hal-02866192, HAL.
    3. Jullien, Bruno & Sand-Zantman, Wilfried, 2020. "The Economics of Platforms: A Theory Guide for Competition Policy," CEPR Discussion Papers 15071, C.E.P.R. Discussion Papers.
    4. Akio Kawasaki & Takao Ohkawa & Makoto Okamura, 2019. "Inter-group competition through joint marketing efforts and intra-group Cournot competition," Journal of Economics, Springer, vol. 128(3), pages 203-224, December.
    5. Gu, Yiquan & Wenzel, Tobias, 2012. "Transparency, entry, and productivity," Economics Letters, Elsevier, vol. 115(1), pages 7-10.
    6. Budzinski, Oliver, 2017. "Wettbewerbsregeln für das Digitale Zeitalter - Die Ökonomik personalisierter Daten, Verbraucherschutz und die 9. GWB-Novelle," Ilmenau Economics Discussion Papers 108, Ilmenau University of Technology, Institute of Economics.
    7. Stühmeier Torben & Wenzel Tobias, 2012. "Regulating Advertising in the Presence of Public Service Broadcasting," Review of Network Economics, De Gruyter, vol. 11(2), pages 1-23, June.
    8. Marco Antonielli & Lapo Filistrucchi, 2011. "Collusion and the political differentiation of newspapers," Working Papers 11-26, NET Institute, revised Nov 2011.
    9. Dewenter Ralf & Heimeshoff Ulrich, 2014. "Media Bias and Advertising: Evidence from a German Car Magazine," Review of Economics, De Gruyter, vol. 65(1), pages 77-94, April.
    10. Vakeel, Khadija Ali & Fudurić, Morana & Malthouse, Edward C., 2021. "Extending variety seeking to multi-sided platforms: Impact of new retailer listing," Journal of Retailing and Consumer Services, Elsevier, vol. 59(C).
    11. Filistrucchi, L. & Antonielli, M., 2012. "Collusion and the Political Differentiation of Newspapers," Other publications TiSEM 3ec21c1b-a4d8-4a31-a5fc-8, Tilburg University, School of Economics and Management.
    12. Matthew Gentzkow & Jesse M. Shapiro & Michael Sinkinson, 2014. "Competition and Ideological Diversity: Historical Evidence from US Newspapers," American Economic Review, American Economic Association, vol. 104(10), pages 3073-3114, October.
    13. Clémence Christin, 2013. "Entry Deterrence Through Cooperative R&D Over-Investment," Recherches économiques de Louvain, De Boeck Université, vol. 79(2), pages 5-26.
    14. Federico Boffa & Lapo Filistrucchi, 2014. "Optimal Cartel Prices in Two-Sided Markets Access," Working Papers 14-19, NET Institute.
    15. Luciano Fanti & Domenico Buccella, 2018. "Profitability of corporate social responsibility in network industries," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 65(3), pages 271-289, September.
    16. Filistrucchi, L. & Antonielli, M., 2012. "Collusion and the Political Differentiation of Newspapers," Other publications TiSEM 41fe3816-41ca-4f3f-8aef-4, Tilburg University, School of Economics and Management.
    17. Haucap, Justus & Herr, Annika & Frank, Björn, 2011. "In vino veritas: Theory and evidence on social drinking," DICE Discussion Papers 37, University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    18. Filistrucchi, L. & Gerardin, D. & van Damme, E.E.C. & Keunen, S. & Klein, T.J. & Michielsen, T.O. & Wileur, J., 2010. "Mergers in Two-Sided Markets - A Report to the NMa," Other publications TiSEM f901d1fe-8878-444e-a685-8, Tilburg University, School of Economics and Management.
    19. Yassine Lefouili & Joana Pinho, 2017. "Collusion in Two-Sided Markets," Working Papers 17-05, NET Institute.
    20. S. Sriram & Puneet Manchanda & Mercedes Bravo & Junhong Chu & Liye Ma & Minjae Song & Scott Shriver & Upender Subramanian, 2015. "Platforms: a multiplicity of research opportunities," Marketing Letters, Springer, vol. 26(2), pages 141-152, June.

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    More about this item

    Keywords

    Media Markets; Collusion; Two-Sided Markets;
    All these keywords.

    JEL classification:

    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law

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