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Concentration in the press industry and the theory of the "circulation spiral"

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  • GABSZEWICZ, Jean
  • LAUSSEL, Didier
  • SONNAC, Nathalie

Abstract

In this paper we model a situation of competition between two editors who are rivals in both the newpapers' and advertising industries.. To identify the consequences of this competition, we analyse a two-period sequential game whose players are the editors each selling a differentiated newspaper, like newspapers of different political content.We characterise the equilibria and explore how they depend on the number of ad-avoiders and ad-lovers, and on the intensity of readers' attraction or repulsion feelings for advertising. Our main finding is that equilibria are often observed in the sequential game, at which one of the editors prevents the entry of his rival and fully monopolises both the press and advertising markets.

Suggested Citation

  • GABSZEWICZ, Jean & LAUSSEL, Didier & SONNAC, Nathalie, 2002. "Concentration in the press industry and the theory of the "circulation spiral"," LIDAM Discussion Papers CORE 2002064, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvco:2002064
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    References listed on IDEAS

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    1. Gabszewicz, Jean J. & Laussel, Dider & Sonnac, Nathalie, 2001. "Press advertising and the ascent of the 'Pensee Unique'," European Economic Review, Elsevier, vol. 45(4-6), pages 641-651, May.
    2. Thompson, R S, 1984. "Structure and Conduct in Local Advertising Markets: The Case of Irish Provincial Newspapers," Journal of Industrial Economics, Wiley Blackwell, vol. 33(2), pages 241-249, December.
    3. Nathalie Sonnac, 2000. "Readers' Attitudes Toward Press Advertising: Are They Ad-Lovers or Ad-Averse?," Journal of Media Economics, Taylor & Francis Journals, vol. 13(4), pages 249-259.
    4. Mussa, Michael & Rosen, Sherwin, 1978. "Monopoly and product quality," Journal of Economic Theory, Elsevier, vol. 18(2), pages 301-317, August.
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    Cited by:

    1. Joana Resende, 2008. "The Economic Advantage of Being the “Voice of the Majority”," Journal of Media Economics, Taylor & Francis Journals, vol. 21(3), pages 158-190.
    2. Ivaldi, Marc & Argentesi, Elena, 2005. "Market Definition in the Printed Media Industry: Theory and Practice," CEPR Discussion Papers 5096, C.E.P.R. Discussion Papers.
    3. João Correia-da-Silva & Joana Resende, 2013. "Free daily newspapers: too strong incentives to print?," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 12(2), pages 113-130, August.

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