Assessing Unilateral Merger Effects in a Two-Sided Market: An Application to the Dutch Daily Newspaper Market

L. Filistrucchi, T.J. Klein, T.O. Michielsen

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Abstract

We compare different methods to assess unilateral merger effects in a two-sided market by applying them to a hypothetical merger in the Dutch newspaper industry. For this, we first specify and estimate a structural model of demand for differentiated products on both the readership and the advertising side of the market. This allows us to recover price elasticities and indirect network effects. Following Filistrucchi, Klein, and Michielsen (2010) marginal costs are then recovered from an oligopoly model of the supply side. We use these estimates of price elasticities, network effects and marginal costs to compare different methods that can be used to evaluate merger effects: We perform a concentration analysis based on the Herfindahl Hirschmann Index, a Small Significant Non-Transitory Increase in Price test, measure Upward Pricing Pressure, and conduct a full merger simulation.
Original languageEnglish
Place of PublicationTilburg
PublisherEconomics
Number of pages31
Volume2011-114
Publication statusPublished - 2011

Publication series

NameCentER Discussion Paper
Volume2011-114

Keywords

  • Two-sided markets
  • newspapers
  • advertising
  • network effects
  • merger simulation
  • SSNIP
  • UPP
  • HHI

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