Abstract

http://ssrn.com/abstract=1694622
 
 

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Responses to Entry in Multi-Sided Markets: The Impact of Craigslist on Local Newspapers


Robert Seamans


New York University (NYU) - Leonard N. Stern School of Business

Feng Zhu


Harvard University - Harvard Business School

May 28, 2013

NET Institute Working Paper No. 10-11

Abstract:     
How do firms respond to entry in multi-sided markets? We address this question by studying the impact of Craigslist, a website providing classified-advertising services, on local US newspapers. We exploit temporal and geographical variation in Craigslist’s entry to show that newspapers with greater reliance on classified-ad revenue experience a larger drop in classified-ad rates after Craigslist’s entry. The impact of Craigslist’s entry on the classified-ad side appears to propagate to other sides of the newspapers’ market. On the subscriber side, these newspapers experience an increase in subscription prices, a decrease in circulation, and an increase in differentiation from each other. On the display-ad side, affected newspapers experience a decrease in display-ad rates. We also find evidence that affected newspapers are less likely to make their content available online. Finally, we estimate that Craigslist’s entry leads to $5.0 billion in year 2000 dollars in savings to classified-ad buyers during 2000-2007.

Number of Pages in PDF File: 34

Keywords: entry, pricing, platforms, two-sided markets

JEL Classification: L13, L86, O33

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Date posted: October 24, 2010 ; Last revised: June 5, 2013

Suggested Citation

Seamans, Robert and Zhu, Feng, Responses to Entry in Multi-Sided Markets: The Impact of Craigslist on Local Newspapers (May 28, 2013). NET Institute Working Paper No. 10-11. Available at SSRN: http://ssrn.com/abstract=1694622 or http://dx.doi.org/10.2139/ssrn.1694622

Contact Information

Robert Seamans (Contact Author)
New York University (NYU) - Leonard N. Stern School of Business ( email )
44 West 4th Street
New York, NY NY 10012
United States
Feng Zhu
Harvard University - Harvard Business School ( email )
Soldiers Field Road
Morgan 431
Boston, MA 02163
United States
HOME PAGE: http://www.hbs.edu/faculty/Pages/profile.aspx?facId=14938
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