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Merger Analysis in Two-Sided Markets: The Belgian Newspaper Industry

Author

Listed:
  • Patrick Cayseele

    (KU Leuven)

  • Stijn Vanormelingen

    (KU Leuven)

Abstract

This paper builds a structural model for both advertising and readers’ demand in the Belgian newspaper industry, taking into account cross network effects that exist between advertisers and newspaper readers We combine our parameter estimates with the publishers’ first-order conditions to simulate the impact of a merger. We find a limited impact of the merger on reader and advertiser welfare. The effect on welfare is easily offset by possible efficiency gains. We compare the simulation outcome with the actual outcomes and find—in line with the predictions—no clear aggregate effect of the merger. The responses of individual newspapers, however, differ from the simulation.

Suggested Citation

  • Patrick Cayseele & Stijn Vanormelingen, 2019. "Merger Analysis in Two-Sided Markets: The Belgian Newspaper Industry," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 54(3), pages 509-541, May.
    • Handle: RePEc:kap:revind:v:54:y:2019:i:3:d:10.1007_s11151-018-9650-z
    DOI: 10.1007/s11151-018-9650-z
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    References listed on IDEAS

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    Cited by:

    1. Cosnita-Langlais, Andreea & Johansen, Bjørn Olav & Sørgard, Lars, 2021. "Upward pricing pressure in two-sided markets: Incorporating rebalancing effects," International Journal of Industrial Organization, Elsevier, vol. 74(C).
    2. David Flath, 2021. "Japanese newspapers," International Journal of Economic Policy Studies, Springer, vol. 15(2), pages 257-299, September.
    3. Kohei Kawaguchi & Toshifumi Kuroda & Susumu Sato, 2021. "Merger Analysis in the App Economy: An Empirical Model of Ad-Sponsored Media," HKUST CEP Working Papers Series 202103, HKUST Center for Economic Policy.
    4. Andreea Cosnita-Langlais & Bjørn Olav Johansen & Lars Sorgard, 2018. "Upward Price Pressure in Two-Sided Markets: Incorporating Feedback Effects," Working Papers hal-04141797, HAL.
    5. Akihiro NAKAMURA & Takanori IDA, 2021. "Delineating zero-price markets with network effects:An analysis of free messenger services," Discussion papers e-21-002, Graduate School of Economics , Kyoto University.

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    More about this item

    Keywords

    Merger simulation; Two-sided markets; Newspapers; Demand estimation;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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