Skip navigation
Title: Technology Shocks in Multi-Sided Markets: The Impact of Craigslist on Local Newspapers
Authors: Seamans, Robert - NYU Stern School of Business
Zhu, Feng - University of Southern California
Issue Date: 2010
Series/Report no.: Net Institute Working Paper;10-11
Abstract: Theories of multi-sided markets suggest that a platform's pricing strategies on different sides of the market are closely linked, and in particular, an increase in competition on one side may lead to an increase in price on other sides. We empirically examine platforms' pricing strategies by exploiting the gradual expansion of Craigslist, a website providing classified ads services, into local newspaper markets. We adopt a differences-in-differences approach by comparing the pricing strategies of local newspapers for which classified ads are likely to be a significant portion of their revenue to others before and after Craigslist's entry. We find that these newspapers drop their classified ad rates significantly more after Craigslist's entry. We also find that the impact of the entry of Craigslist propagates to other sides of the newspaper market. These newspapers increase their subscription rates relative to others, and consequently, their circulation also drops more. Finally, lower circulation also leads to lower display ad rates for these newspapers. Our study helps build an understanding of how incumbent media platforms respond to technologically disruptive entrants in multi-sided markets.
URI: http://hdl.handle.net/2451/29871
Appears in Collections:NET Institute Working Papers Series

Files in This Item:
File Description SizeFormat 
Seamans_Zhu_10-11.pdfSeamans_Zhu_10-11895.62 kBAdobe PDFView/Open


Items in FDA are protected by copyright, with all rights reserved, unless otherwise indicated.