Price Wars in Two-Sided Markets: The Case of the UK Quality Newspapers

43 Pages Posted: 12 Nov 2009

See all articles by Stefan Behringer

Stefan Behringer

University of Duisburg-Essen - Mercator School of Management

Lapo Filistrucchi

Tilburg University, TILEC; University of Florence, Dipartimento di Scienze Economiche

Date Written: November 2, 2009

Abstract

This paper investigates the price war in the UK quality newspaper industry in the 1990s. We build a model of the newspaper market which encompasses demand for differentiated products on both, the readers and advertisers side of the market, and profit maximization by four competing oligopolistic editors who recognize the existence of an indirect network effect of circulation on advertising demand. Editors choose first the political position, then simultaneously cover prices and advertising tariffs. We contribute to the literature on two-sided markets by endogenizing the political differentiation of newspapers in a model with more than two firms. We simulate changes to market structure in order to explore which of the candidate explanations is most likely to lie behind the observed price war.

Suggested Citation

Behringer, Stefan and Filistrucchi, Lapo, Price Wars in Two-Sided Markets: The Case of the UK Quality Newspapers (November 2, 2009). NET Institute Working Paper No. 09-26. Available at SSRN: https://ssrn.com/abstract=1499866 or http://dx.doi.org/10.2139/ssrn.1499866

Stefan Behringer

University of Duisburg-Essen - Mercator School of Management ( email )

Lotharstra├če 65
Duisburg, Nordrhein-Westfalen 47057
Germany

HOME PAGE: http://www.stefanbehringer.com

Lapo Filistrucchi (Contact Author)

Tilburg University, 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://www.lapofilistrucchi.com

University of Florence, Dipartimento di Scienze Economiche ( email )

via delle Pandette 9
Florence, Florence IT-50127
Italy
+39 055 2759579 (Phone)
+39 055 2759910 (Fax)

HOME PAGE: http://www.lapofilistrucchi.com

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