Mergers in Two-Sided Markets: An Application to the Canadian Newspaper Industry

Leonard N. Stern School of Business Working Paper No. EC-07-03

36 Pages Posted: 14 May 2007 Last revised: 26 Sep 2012

Ambarish Chandra

University of Toronto - Rotman School of Management

Allan Collard-Wexler

Duke University

Multiple version iconThere are 2 versions of this paper

Date Written: March 22, 2008

Abstract

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.

JEL Classification: L82, L41

Suggested Citation

Chandra, Ambarish and Collard-Wexler, Allan, Mergers in Two-Sided Markets: An Application to the Canadian Newspaper Industry (March 22, 2008). Leonard N. Stern School of Business Working Paper No. EC-07-03 . Available at SSRN: https://ssrn.com/abstract=985581 or http://dx.doi.org/10.2139/ssrn.985581

Ambarish Chandra (Contact Author)

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6
Canada

Allan Collard-Wexler

Duke University ( email )

100 Fuqua Drive
Durham, NC 27708-0204
United States

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