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Semi-collusion in media markets

Ralf Dewenter, Justus Haucap () and Tobias Wenzel

No 11, DICE Discussion Papers from University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE)

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.

Keywords: Media Markets; Collusion; Two-Sided Markets (search for similar items in EconPapers)
JEL-codes: L40 L82 D43 K21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-com, nep-cul and nep-ind
Date: 2010
References: View references in EconPapers View complete reference list from CitEc
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