Merger Simulation in a Two-Sided Market: The Case of the Dutch Daily Newspapers
Tilburg University, TILEC; University of Florence, Dipartimento di Scienze Economiche
Tobias J. Klein
Tilburg University - Department of Econometrics & Operations Research; Tilburg University - Center for Economic Research (CentER); Institute for the Study of Labor (IZA); Netspar; Tilburg Law and Economics Center (TILEC)
Tilburg University - Center and Faculty of Economics and Business Administration; Tilburg Sustainability Center
September 30, 2010
NET Institute Working Paper No. 10-15
We develop a structural econometric framework that allows us to simulate the effects of mergers among two-sided platforms selling differentiated products. We apply the proposed methodology to the Dutch newspaper industry. Our structural model encompasses demands for differentiated products on both sides of the market and profit maximization by competing oligopolistic publishers who choose subscription and advertising prices, while taking the interactions between the two-sides of the market into account. We measure the sign and size of the indirect network effects between the two sides of the market and simulate the effects of a hypothetical merger on prices and welfare.
Number of Pages in PDF File: 43
Keywords: Two-Sided Markets, Newspapers, Advertising, Network Effects, Merger Simulation, SSNIP Test
JEL Classification: L13, L40, L82
Date posted: October 20, 2010
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