The Impact of Internet on the Market for Daily Newspapers in Italy

Lapo Filistrucchi (lapo.filistrucchi@unifi.it)

No ECO2005/12, Economics Working Papers from European University Institute

Abstract: Recent years have seen a surge in websites that provide news for free and, up to the end of 2001, daily newspapers in Italy have shown a growing trend towards making available online for free; the exact articles published on paper. To assess whether on-line news and traditional daily newspapers are substitute, complement or independent goods, I model the choice between different daily newspapers as a discrete choice among differentiated products. Considering the availability of a website as a newspaper characteristic and controlling for other observable and unobservable characteristics of newspapers and of the outside good, I estimate a logit model of demand on market level data from 1976 to 2001 for the main national daily newspapers in Italy. Results suggest that opening a website had a negative impact both on the sales of the newspaper who opened it and on those of its rivals. I calculate the implied short-run and approximated long-run losses in both sales and profits and provide some evidence of the additional negative effect stemming from the general availability of Internet and on-line news. Results also contribute to explaining why, starting from the end of 2001, many publishers introduced a fee to read on-line the paper edition of the newspaper.

Keywords: daily newspapers; Internet; websites; substitution; discrete choice models; product differentiation; dynamics; market level data (search for similar items in EconPapers)
JEL-codes: C2 D12 L12 O3 (search for similar items in EconPapers)
Date: 2005
New Economics Papers: this item is included in nep-com, nep-cul, nep-dcm and nep-mkt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (24)

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