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. We first specify and estimate a structural model of demand for differentiated products in both the readership and the advertising sides of the market. This allows us to recover price elasticities and indirect network effects. 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 perform a concentration analysis based on the Herfindahl-Hirschmann index, to conduct a small but significant non-transitory increase in price test, to measure upward pricing pressure, and to run a full merger simulation.
|Journal of Competition Law and Economics
|Published - 2012