Collusion and the Political Differentiation of Newspapers

L. Filistrucchi, M. Antonielli

Research output: Working paperDiscussion paperOther research output

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Abstract

Abstract: We analyse a newspaper market where two editors first choose the political position of their newspaper, then set cover prices and advertising tariffs. We build on the work of Gabszewicz, Laussel and Sonnac (2001, 2002), whose model of competition among newspaper publishers we take as the stage game of an infinitely repeated game, and investigate the incentives to collude and the properties of the collusive agreements in terms of welfare and pluralism. We analyse and compare two forms of collusion: in the first, publishers cooperatively select both prices and political position; in the second, publishers cooperatively select prices only. We show that collusion on prices reinforces the tendency towards a Pensée Unique discussed in Gabszewicz, Laussel and Sonnac (2001), while collusion on both prices and the political line would tend to mitigate it. Our findings question the rationale for Joint Operating Agreements among US newspapers, which allow publishers to cooperate in setting cover prices and advertising tariffs but not the editorial line. We also show that, whatever the form of collusion, incentives to collude first increase, then decrease as advertising revenues per reader increase.
Original languageEnglish
Place of PublicationTilburg
PublisherFinance
Number of pages72
Volume2012-024
Publication statusPublished - 2012

Publication series

NameCentER Discussion Paper
Volume2012-024

Fingerprint

Collusion
Tariffs
Incentives
Infinitely repeated games
Rationale
Revenue
Pluralism

Keywords

  • collusion
  • newspapers
  • two-sided markets
  • indirect network effects
  • pluralism
  • spatial competition

Cite this

Filistrucchi, L., & Antonielli, M. (2012). Collusion and the Political Differentiation of Newspapers. (CentER Discussion Paper; Vol. 2012-024). Tilburg: Finance.
Filistrucchi, L. ; Antonielli, M. / Collusion and the Political Differentiation of Newspapers. Tilburg : Finance, 2012. (CentER Discussion Paper).
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Filistrucchi, L & Antonielli, M 2012 'Collusion and the Political Differentiation of Newspapers' CentER Discussion Paper, vol. 2012-024, Finance, Tilburg.

Collusion and the Political Differentiation of Newspapers. / Filistrucchi, L.; Antonielli, M.

Tilburg : Finance, 2012. (CentER Discussion Paper; Vol. 2012-024).

Research output: Working paperDiscussion paperOther research output

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T1 - Collusion and the Political Differentiation of Newspapers

AU - Filistrucchi, L.

AU - Antonielli, M.

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N2 - Abstract: We analyse a newspaper market where two editors first choose the political position of their newspaper, then set cover prices and advertising tariffs. We build on the work of Gabszewicz, Laussel and Sonnac (2001, 2002), whose model of competition among newspaper publishers we take as the stage game of an infinitely repeated game, and investigate the incentives to collude and the properties of the collusive agreements in terms of welfare and pluralism. We analyse and compare two forms of collusion: in the first, publishers cooperatively select both prices and political position; in the second, publishers cooperatively select prices only. We show that collusion on prices reinforces the tendency towards a Pensée Unique discussed in Gabszewicz, Laussel and Sonnac (2001), while collusion on both prices and the political line would tend to mitigate it. Our findings question the rationale for Joint Operating Agreements among US newspapers, which allow publishers to cooperate in setting cover prices and advertising tariffs but not the editorial line. We also show that, whatever the form of collusion, incentives to collude first increase, then decrease as advertising revenues per reader increase.

AB - Abstract: We analyse a newspaper market where two editors first choose the political position of their newspaper, then set cover prices and advertising tariffs. We build on the work of Gabszewicz, Laussel and Sonnac (2001, 2002), whose model of competition among newspaper publishers we take as the stage game of an infinitely repeated game, and investigate the incentives to collude and the properties of the collusive agreements in terms of welfare and pluralism. We analyse and compare two forms of collusion: in the first, publishers cooperatively select both prices and political position; in the second, publishers cooperatively select prices only. We show that collusion on prices reinforces the tendency towards a Pensée Unique discussed in Gabszewicz, Laussel and Sonnac (2001), while collusion on both prices and the political line would tend to mitigate it. Our findings question the rationale for Joint Operating Agreements among US newspapers, which allow publishers to cooperate in setting cover prices and advertising tariffs but not the editorial line. We also show that, whatever the form of collusion, incentives to collude first increase, then decrease as advertising revenues per reader increase.

KW - collusion

KW - newspapers

KW - two-sided markets

KW - indirect network effects

KW - pluralism

KW - spatial competition

M3 - Discussion paper

VL - 2012-024

T3 - CentER Discussion Paper

BT - Collusion and the Political Differentiation of Newspapers

PB - Finance

CY - Tilburg

ER -

Filistrucchi L, Antonielli M. Collusion and the Political Differentiation of Newspapers. Tilburg: Finance. 2012. (CentER Discussion Paper).