Working Paper: CEPR ID: DP5096
Authors: Elena Argentesi; Marc Ivaldi
Abstract: This paper first discusses how the market is delineated in some recent antitrust cases in the printed media industry. It evaluates the extent to which the main features of the industry are incorporated into the analysis and affect market definition. In addition we argue that an econometric analysis that does not incorporate these features can lead to biased estimates of elasticities. As demand substitution is a crucial element for defining market, bad estimates of elasticities could blur the boundaries of relevant markets. Second we propose a simple model that encompasses these features and in particular the two-sidedness of the market. Thirdly, we review some empirical papers that analyse the issue of demand estimation in printed media. Finally, we perform a statistical estimation on a dataset of magazines in order to provide a measure of the possible bias that could arise in the estimation of elasticities when one does not use a proper model.
Keywords: market definition; printed media; two-sided markets
JEL Codes: K21; L40; L82
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| two-sided nature of media markets (D16) | market definition (G10) |
| neglecting two-sided nature (D16) | biased estimates of demand elasticities (C51) |
| interlinked relationships between advertising demand and readership demand (M37) | biased estimates (C51) |
| failure to account for two-sidedness (D16) | blurred market boundaries (L19) |
| improper model usage (C52) | significant biases in elasticity estimates (C51) |
| understanding interplay between advertising and readership demand (M37) | accurate market definition (G10) |