Abstract

http://ssrn.com/abstract=2335743
 


 



Price Discrimination in a Two-Sided Market: Theory and Evidence from the Newspaper Industry


Charles Angelucci


INSEAD

Julia Cage


Harvard University; Sciences Po Paris Department of Economics

Romain De Nijs


Paris School of Economics (PSE)

September 30, 2013

NET Institute Working Paper No. 13-13

Abstract:     
We investigate theoretically and empirically the determinants of second-degree price discrimination in two-sided markets. We build a model in which a newspaper must attract both readers and advertisers. Readers are uncertain as to their future benefit from reading, and heterogeneous in their taste for reading. Advertisers are heterogeneous in their outside option, taste for subscribers, and taste for occasional buyers. To estimate empirically the effect of the advertisers' side of the industry on price discrimination on the readers' side, we use a “quasi-natural experiment". We exploit the introduction of advertisement on French Television in 1968, which we treat as a negative shock on advertisement revenues of daily national newspapers (treated group), but not on daily local newspapers (control group). We build a new dataset on French local newspapers between 1960 and 1974 and perform a Differences-in-Differences analysis. We find robust evidence of increased price discrimination as a result of a drop in advertisement revenues.

Number of Pages in PDF File: 23

Keywords: Newspaper Industry, Second-Degree Price Discrimination, Two-Sided Markets

JEL Classification: L11, M13

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Date posted: October 7, 2013  

Suggested Citation

Angelucci, Charles and Cage, Julia and Nijs, Romain de, Price Discrimination in a Two-Sided Market: Theory and Evidence from the Newspaper Industry (September 30, 2013). NET Institute Working Paper No. 13-13. Available at SSRN: http://ssrn.com/abstract=2335743 or http://dx.doi.org/10.2139/ssrn.2335743

Contact Information

Charles Angelucci (Contact Author)
INSEAD ( email )
Boulevard de Constance
F-77305 Fontainebleau Cedex
France
Julia Cage
Harvard University ( email )
Littauer Center
Cambridge, MA 02138
United States
Sciences Po Paris Department of Economics ( email )
28 Rue des Saints-Pères
Paris, 75007
France
Romain De Nijs
Paris School of Economics (PSE) ( email )
48 Boulevard Jourdan
Paris, 75014 75014
France
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