Mergers in Two-Sided Markets: An Application to the Canadian Newspaper Industry
University of Toronto - Rotman School of Management
New York University - Leonard N. Stern School of Business - Department of Economics; Leonard N. Stern School of Business - Department of Economics
March 22, 2008
Leonard N. Stern School of Business Working Paper No. EC-07-03
In this paper we study mergers in two-sided industries. While mergers have been studied extensively in traditional industries, and there is a large and rapidly evolving literature on two-sided markets, there has been little work empirically examining mergers in these markets. We present a model that shows that mergers in two-sided markets may not necessarily lead to higher prices for either side of the market. We test our conclusions by examining a spate of mergers in the Canadian newspaper industry in the late 1990s. Specifically, we analyze prices for both circulation and advertising to try to understand the impact that these mergers had on consumer welfare. We find that greater concentration did not lead to higher prices for either newspaper subscribers or advertisers.
Number of Pages in PDF File: 36
JEL Classification: L82, L41
Date posted: May 14, 2007 ; Last revised: September 26, 2012
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