Collusion and the Political Differentiation of Newspapers

L. Filistrucchi, M. Antonielli

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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
PublisherTILEC
Number of pages72
Volume2012-014
Publication statusPublished - 2012

Publication series

NameTILEC Discussion Paper
Volume2012-014

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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. (TILEC Discussion Paper; Vol. 2012-014). TILEC. http://ssrn.com/abstract=2028903