Working Paper: CEPR ID: DP3269
Authors: Marcus Asplund; Rickard Eriksson; Niklas Strand
Abstract: This Paper provides an empirical examination of third-degree price discrimination in the Swedish newspaper industry. The results show that price discrimination is more prevalent in competitive markets and among newspapers with low market shares. This supports predictions from recent theoretical work, including Chen (1997) and Fudenberg and Tirole (2000), that suggest that firms attempt to poach consumers from rivals by offering targeted discounts. In addition, we find weak evidence that newspapers in markets with large inflows of new consumers and those covering wide geographical areas offer more discounts.
Keywords: newspapers; oligopoly; price discrimination
JEL Codes: D43; L13; L82
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Local competitors (duopoly) (L13) | third-degree price discrimination (D40) |
| Market share < 40% (L19) | greater fraction of subscriptions at a discount (L42) |
| Consumer influx (immigration) (F22) | more discounts (L42) |
| Increase in market share (10 percentage points) (D49) | reduction in discounts (>1 percentage point) (L42) |