News Aggregators and Competition Among Newspapers in the Internet

50 Pages Posted: 4 Nov 2012

See all articles by Doh-Shin Jeon

Doh-Shin Jeon

Toulouse School of Economics (TSE); Centre for Economic Policy Research (CEPR)

Nikrooz Nasr Esfahani

Toulouse School of Economics (TSE)

Date Written: October 2, 2012

Abstract

In this paper, we study how the presence of a news aggregator affects competition among (horizontally differentiated) newspapers in the Internet. For this purpose, we build a model of multiple issues which allows each newspaper to choose quality on each issue. Our model provides a micro foundation for the service offered by the aggregator and captures both the "business-stealing effect" and the "readership-expansion effect" of the aggregator. We find that the presence of the aggregator leads each newspaper to specialize in terms of news coverage. In this case, its presence changes quality choices from strategic substitutes to strategic complements. In the case of symmetric newspapers, this leads to an increase in the quality of newspapers and an increase in consumer surplus, with an ambiguous effect on newspapers’ profits. In the case of asymmetric newspapers, the impact on the quality choice is ambiguous.

Keywords: Newspapers, News Aggregator, Internet, Quality, Strategic Substitutes, Strategic Complements, Advertising, Business-stealing, Readership-expansion, Opting Out

JEL Classification: D21, D43, L13, L82

Suggested Citation

Jeon, Doh-Shin and Nasr Esfahani, Nikrooz, News Aggregators and Competition Among Newspapers in the Internet (October 2, 2012). NET Institute Working Paper No. 12-20, Available at SSRN: https://ssrn.com/abstract=2164396 or http://dx.doi.org/10.2139/ssrn.2164396

Doh-Shin Jeon (Contact Author)

Toulouse School of Economics (TSE) ( email )

Place Anatole-France
Toulouse Cedex, F-31042
France

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Nikrooz Nasr Esfahani

Toulouse School of Economics (TSE) ( email )

Place Anatole-France
Toulouse Cedex, F-31042
France

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