Abstract

http://ssrn.com/abstract=1958065
 
 

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Collusion and the Political Differentiation of Newspapers


Marco Antonielli


Barcelona Graduate School of Economics (Barcelona GSE)

Lapo Filistrucchi


Tilburg University, Department of Economics, CentER & TILEC; University of Florence, Dipartimento di Scienze Economiche

October 1, 2011

NET Institute Working Paper No. 11-26

Abstract:     
We analyse a newspaper market where two editors compete for advertising as well as for readership. They first choose the political position of their newspaper, then set cover prices and advertising tariffs. We build on the work of Gabszewicz, Laussel and Sonnac (2001, 2002), whose model we take as the stage game of an infinitely repeated game, and investigate the incentives to collude and the properties of the collusive agreements in terms of welfare and pluralism. We analyse and compare two forms of collusion: in the first, publishers cooperatively select both prices and political position; in the second, publishers cooperatively select prices only. Whereas the first leads to intermediate product differentiation, the second leads, as in Gabszewicz, Laussel and Sonnac (2001, 2002), to minimal product differentiation. However, in the latter case, differently from Gabszewicz, Laussel and Sonnac (2001, 2002), cover prices are positive and the minimal differentiation outcome does not depend on the size of the advertising market. We thus show that collusion on prices reinforces the tendency towards a Pensée Unique discussed in Gabszewicz, Laussel and Sonnac (2001).

Number of Pages in PDF File: 59

Keywords: collusion, newspapers, two-sided markets, indirect network effects, pluralism, spatial competition

JEL Classification: L41, L82, D43, K21

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Date posted: November 24, 2011 ; Last revised: November 30, 2011

Suggested Citation

Antonielli, Marco and Filistrucchi, Lapo, Collusion and the Political Differentiation of Newspapers (October 1, 2011). NET Institute Working Paper No. 11-26. Available at SSRN: http://ssrn.com/abstract=1958065 or http://dx.doi.org/10.2139/ssrn.1958065

Contact Information

Marco Antonielli (Contact Author)
Barcelona Graduate School of Economics (Barcelona GSE) ( email )
Ramon Trias Fargas, 25-27
Barcelona, Barcelona 08005
Spain
Lapo Filistrucchi
Tilburg University, Department of Economics, CentER & TILEC ( email )
P.O. Box 90153
Tilburg, Noord-Brabant NL-5000 LE
Netherlands
+31 13 466 3360 (Phone)
+31 13 466 3042 (Fax)
HOME PAGE: http://center.uvt.nl/staff/filistrucchi/
University of Florence, Dipartimento di Scienze Economiche ( email )
via delle Pandette 9
Florence, Florence IT-50127
Italy
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