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Merger Simulation in a Two-Sided Market: The Case of the Dutch Daily Newspapers

Authors: Filistrucchi, Lapo - Tilburg University and University of Florence
Klein, Tobias J. - Tilburg University
Michielsen, Thomas - Tilburg University
Keywords: Two-sided markets, newspapers, advertising, network eects, merger simulation, SSNIP test
Issue Date: 2010
Series/Report no.: Net Institute Working Paper;10-15
Abstract: We develop a structural econometric framework that allows us to simulate the effects of mergers among two-sided platforms selling differentiated products. We apply the proposed methodology to the Dutch newspaper industry. Our structural model encompasses demands for differentiated products on both sides of the market and profit maximization by competing oligopolistic publishers who choose subscription and advertising prices, while taking the interactions between the two-sides of the market into account. We measure the sign and size of the indirect network effects between the two sides of the market and simulate the effects of a hypothetical merger on prices and welfare.
Appears in Collections:NET Institute Working Papers Series

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