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Optimal Cover Prices and the Effects of Website Provision on Advertising and Magazine Demand

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  • Kaiser, Ulrich

Abstract

I derive and estimate a model for cover price setting in print media markets where actors are faced by two interrelated demand curves: the demand for the print medium and the demand for advertising space. Publicly available data on German women?s magazines observed between 1998 and 2001 are used in the GMM estimation. Main findings are that my estimated marginals cost coincide well with those of industry sources, magazines with a high circulation elasticity of advertising demand price markedly below marginal cost and website provision neither has a significant effect on magazine nor on advertising demand. Keywords: magazines, cost estimation, GMM estimation, website provision

Suggested Citation

  • Kaiser, Ulrich, 2002. "Optimal Cover Prices and the Effects of Website Provision on Advertising and Magazine Demand," ZEW Discussion Papers 02-54, ZEW - Leibniz Centre for European Economic Research.
    • Handle: RePEc:zbw:zewdip:568
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    References listed on IDEAS

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    1. Lars-Hendrik Röller & Johan Stennek & Frank Verboven, 2006. "Efficiency Gains from Mergers," Chapters, in: Fabienne IIzkovitz & Roderick Meiklejohn (ed.), European Merger Control, chapter 3, Edward Elgar Publishing.
    2. Kaiser, Ulrich, 2001. "The effects of website provision on the demand for German women's magazines," ZEW Discussion Papers 01-69, ZEW - Leibniz Centre for European Economic Research.
    3. Rosse, James N, 1970. "Estimating Cost Function Parameters without Using Cost Data: Illustrated Methodology," Econometrica, Econometric Society, vol. 38(2), pages 256-275, March.
    4. repec:hhs:iuiwop:543 is not listed on IDEAS
    5. Marc Rysman, 2004. "Competition Between Networks: A Study of the Market for Yellow Pages," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 71(2), pages 483-512.
    6. Merrilees, William J, 1983. "Anatomy of a Price Leadership Challenge: An Evaluation of Pricing Strategies in the Australian Newspaper Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 31(3), pages 291-311, March.
    7. Thompson, R Stephen, 1989. "Circulation versus Advertiser Appeal in the Newspaper Industry: An Empirical Investigation," Journal of Industrial Economics, Wiley Blackwell, vol. 37(3), pages 259-271, March.
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    Cited by:

    1. Kremhelmer, Susanne, 2004. "Fairness, Property Rights, and the Market for Media," Munich Dissertations in Economics 2521, University of Munich, Department of Economics.

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    More about this item

    Keywords

    magazines; cost estimation; GMM estimation; website provision;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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