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Tax-free digital news?

Author

Listed:
  • Foros, Øystein
  • Kind, Hans Jarle
  • Wyndham, Tim

Abstract

News platforms are struggling. Their printed readership is predominantly old, and their digital product struggles to win the attention of the young. For several decades tax reductions have been used in Europe to increase the circulation of printed newspapers. Would extending these reductions to digital platforms stimulate digital consumption? Using a two-sided pricing model where a print platform and a digital platform compete for multi-homing consumers and advertisers we show that the answer is no. The two-sidedness of the market means that the digital price would increase. Not only would digital circulation decrease but so too would the fraction of consumers that access news from both platforms. Key media policy goals of reach (circulation) and pluralism (multi-homing) would be harmed.

Suggested Citation

  • Foros, Øystein & Kind, Hans Jarle & Wyndham, Tim, 2019. "Tax-free digital news?," International Journal of Industrial Organization, Elsevier, vol. 66(C), pages 119-136.
    • Handle: RePEc:eee:indorg:v:66:y:2019:i:c:p:119-136
    DOI: 10.1016/j.ijindorg.2018.05.006
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    References listed on IDEAS

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    Cited by:

    1. Armando José Garcia Pires, 2023. "Ad-Valorem Taxes, Prices and Content Diversification in the News Market," Games, MDPI, vol. 14(2), pages 1-28, March.
    2. Frank Stähler & Leander Stähler, 2022. "Copyright Protection in the Digital Single Market," CESifo Working Paper Series 9597, CESifo.
    3. Frank Stähler & Leander Stähler, 2022. "Copyright Protection in the Digital Single Market: Potential Consequences for Content Platform Competition," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 61(1), pages 73-94, August.

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    More about this item

    Keywords

    Two-sided markets; Multi-homing; Digital media; Incremental pricing; Value added tax;
    All these keywords.

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media

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