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Merger Analysis in Two-Sided Markets: The Belgian Newspaper Industry

Authors
  • Van Cayseele, Patrick1
  • Vanormelingen, Stijn2
  • 1 KU Leuven, LICOS and CES, Naamsestraat 69, Louvain, 3000, Belgium , Louvain (Belgium)
  • 2 KU Leuven, ECON-CEDON and VIVES, Campus Brussels, Warmoesberg 26, Brussels, 1000, Belgium , Brussels (Belgium)
Type
Published Article
Journal
Review of Industrial Organization
Publisher
Springer US
Publication Date
Jul 31, 2018
Volume
54
Issue
3
Pages
509–541
Identifiers
DOI: 10.1007/s11151-018-9650-z
Source
Springer Nature
Keywords
License
Yellow

Abstract

This paper builds a structural model for both advertising and readers’ demand in the Belgian newspaper industry, taking into account cross network effects that exist between advertisers and newspaper readers We combine our parameter estimates with the publishers’ first-order conditions to simulate the impact of a merger. We find a limited impact of the merger on reader and advertiser welfare. The effect on welfare is easily offset by possible efficiency gains. We compare the simulation outcome with the actual outcomes and find—in line with the predictions—no clear aggregate effect of the merger. The responses of individual newspapers, however, differ from the simulation.

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