Collusion and the Political Differentiation of Newspapers

M. Antonielli, L. Filistrucchi

Research output: Working paperOther research output

Abstract

We analyse a newspaper market where two editors compete for advertising as well as for readership. They 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 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. Whereas the first leads to intermediate product differentiation, the second leads, as in Gabszewicz, Laussel and Sonnac (2001, 2002), to minimal product differentiation. However, in the latter case, differently from Gabszewicz, Laussel and Sonnac (2001, 2002), cover prices are positive and the minimal differentiation outcome does not depend on the size of the advertising market. We thus show that collusion on prices reinforces the tendency towards a Pensée Unique discussed in Gabszewicz, Laussel and Sonnac (2001).
Original languageEnglish
PublisherNET Institute
Number of pages59
Volume11-26
Publication statusPublished - Oct 2011

Publication series

NameNET Institute Working Paper
Volume11-26

Fingerprint

Collusion
Product differentiation
Tariffs
Infinitely repeated games
Incentives
Pluralism

Keywords

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

Cite this

Antonielli, M., & Filistrucchi, L. (2011). Collusion and the Political Differentiation of Newspapers. (NET Institute Working Paper; Vol. 11-26). NET Institute.
Antonielli, M. ; Filistrucchi, L. / Collusion and the Political Differentiation of Newspapers. NET Institute, 2011. (NET Institute Working Paper).
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Antonielli, M & Filistrucchi, L 2011 'Collusion and the Political Differentiation of Newspapers' NET Institute Working Paper, vol. 11-26, NET Institute.

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

NET Institute, 2011. (NET Institute Working Paper; Vol. 11-26).

Research output: Working paperOther research output

TY - UNPB

T1 - Collusion and the Political Differentiation of Newspapers

AU - Antonielli, M.

AU - Filistrucchi, L.

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N2 - We analyse a newspaper market where two editors compete for advertising as well as for readership. They 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 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. Whereas the first leads to intermediate product differentiation, the second leads, as in Gabszewicz, Laussel and Sonnac (2001, 2002), to minimal product differentiation. However, in the latter case, differently from Gabszewicz, Laussel and Sonnac (2001, 2002), cover prices are positive and the minimal differentiation outcome does not depend on the size of the advertising market. We thus show that collusion on prices reinforces the tendency towards a Pensée Unique discussed in Gabszewicz, Laussel and Sonnac (2001).

AB - We analyse a newspaper market where two editors compete for advertising as well as for readership. They 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 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. Whereas the first leads to intermediate product differentiation, the second leads, as in Gabszewicz, Laussel and Sonnac (2001, 2002), to minimal product differentiation. However, in the latter case, differently from Gabszewicz, Laussel and Sonnac (2001, 2002), cover prices are positive and the minimal differentiation outcome does not depend on the size of the advertising market. We thus show that collusion on prices reinforces the tendency towards a Pensée Unique discussed in Gabszewicz, Laussel and Sonnac (2001).

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KW - two-sided markets

KW - indirect network effects

KW - pluralism

KW - spatial competition

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Antonielli M, Filistrucchi L. Collusion and the Political Differentiation of Newspapers. NET Institute. 2011 Oct. (NET Institute Working Paper).