Who Benefits Whom in Daily Newspaper Markets?

39 Pages Posted: 12 Oct 2000 Last revised: 19 Oct 2010

See all articles by Joel Waldfogel

Joel Waldfogel

University of Minnesota - Twin Cities - Carlson School of Management; National Bureau of Economic Research (NBER); University of Minnesota - Twin Cities - Department of Economics

Lisa M. George

Hunter College, CUNY; The Graduate Center, CUNY

Date Written: October 2000

Abstract

Markets are generally thought to avoid problems, such as tyranny of the majority, that arise when allocation is accomplished through collective processes. Yet, with fixed costs, differentiated product markets deliver only products desired by substantial constituencies. When consumers share similar preferences, then additional consumers will bring forth additional products or improve the attributes or position of existing products and the consumers confer positive pecuniary preference externalities' on each other. However, if distinct groups of consumers have substantially different preferences, the groups can hurt each other through product markets. We document the pattern of preference externalities among black and white consumers of daily newspapers in the US. We find that, in their capacity as newspaper consumers, members of each group benefits themselves and either harm, or fail to benefit, each other through the product market. We document that product positioning provides the mechanism underlying our results. While Friedman (1962) argues that the use of political channels tends to strain the social cohesion essential for a stable society,' while, by contrast, widespread use of the market reduces the strain on the social fabric by rendering conformity unnecessary,' mounting evidence on media markets suggests otherwise.

Suggested Citation

Waldfogel, Joel and George, Lisa Megargle, Who Benefits Whom in Daily Newspaper Markets? (October 2000). NBER Working Paper No. w7944, Available at SSRN: https://ssrn.com/abstract=245743

Joel Waldfogel

University of Minnesota - Twin Cities - Carlson School of Management ( email )

19th Avenue South
Minneapolis, MN 55455
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

University of Minnesota - Twin Cities - Department of Economics ( email )

271 19th Avenue South
Minneapolis, MN 55455
United States

Lisa Megargle George (Contact Author)

Hunter College, CUNY ( email )

695 Park Avenue
New York, NY 10065
United States

The Graduate Center, CUNY ( email )

365 Fifth Avenue
New York,, NY 10016
United States

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