Abstract
This paper studies how news aggregators affect the quality choices of newspapers competing on the Internet. To provide a micro-foundation for the role of the aggregator, we build a model of multiple issues where newspapers choose their quality on each issue. Our model captures well the main trade-off between the "business-stealing" effect and the "readership-expansion" effect. We find that the aggregator increases the quality only if the readership-expansion effect is large enough relative to the business-stealing effect. Using a condition obtained from empirical results, we find that the aggregator increases the quality and social welfare, but affects newspapers' profits ambiguously.
JEL codes
- D21: Firm Behavior: Theory
- D43: Oligopoly and Other Forms of Market Imperfection
- L13: Oligopoly and Other Imperfect Markets
- L82: Entertainment • Media
Replaces
Nikrooz Nasr Esfahani, and Doh-Shin Jeon, “News Aggregators and Competition Among Newspapers on the Internet”, TSE Working Paper, n. 13-388, April 1, 2013, revised July 16, 2014.
Reference
Nikrooz Nasr Esfahani, and Doh-Shin Jeon, “News Aggregators and Competition Among Newspapers on the Internet”, American Economic Journal: Microeconomics, vol. 8, n. 4, October 2016, pp. 91–114.
See also
Published in
American Economic Journal: Microeconomics, vol. 8, n. 4, October 2016, pp. 91–114