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Price Wars in Two-Sided Markets: The case of the UK Quality Newspapers

Stefan Behringer and Lapo Filistrucchi ()

No 09-26, Working Papers from NET Institute

Abstract: This paper investigates the price war in the UK quality newspaper industry in the 1990s. We build a model of the newspaper market which encompasses demand for differentiated products on both, the readers and advertisers side of the market, and profit maximization by four competing oligopolistic editors who recognize the existence of an indirect network effect of circulation on advertising demand. Editors choose first the political position, then simultaneously cover prices and advertising tariffs. We contribute to the literature on two-sided markets by endogenizing the political differentiation of newspapers in a model with more than two firms. We simulate changes to market structure in order to explore which of the candidate explanations is most likely to lie behind the observed price war.

Keywords: antitrust; two-sided markets; media markets; UK quality newspapers; predation; price wars; advertising; platforms. (search for similar items in EconPapers)
JEL-codes: D21 D43 K21 L13 L22 L41 L82 L86 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2009-11, Revised 2009-12
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