Newspaper Differentiation and Investments in Journalism: The Role of Tax Policy

Hans Jarle Kind, Guttorm Schjelderup and Frank Stähler

No 3582, CESifo Working Paper Series from CESifo

Abstract: Many countries levy reduced-rate indirect taxes on newspapers, with proclaimed policy goals of stimulating investment in journalism and ensuring low newspaper prices. However, by taking into account the fact that the media industry operates in two-sided markets, we find the paradoxical result that the consequences of a low-tax regime might be quite the opposite; low investments and high prices. We also show that the low-tax regime tends to increase newspaper differentiation. If the advertising market is relatively small, the newspapers might invest too little in journalism and be too differentiated from a social point of view. In this case a tax increase will be welfare-enhancing.

Keywords: two-sided markets; ad-valorem taxes (search for similar items in EconPapers)
JEL-codes: D40 D43 H21 H22 L13 (search for similar items in EconPapers)
Date: 2011
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Related works:
Journal Article: Newspaper Differentiation and Investments in Journalism: The Role of Tax Policy (2013)
Working Paper: Newspaper Differentiation and Investments in Journalism: The Role of Tax Policy (2011)
Working Paper: Newspaper Differentiation and Investments in Journalism: The Role of Tax Policy (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_3582

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