Competition in a Media Market: the Case of Magazines
Abstract: This study investigates whether the Japanese magazine market in which resale price maintenance is a common marketing practice, is competitive or cooperative, explicitly incorporating the two-sidedness of the market into the analytical framework. First, the demand models on the reader side and the advertiser side are estimated using the unique panel data of the Japanese magazines from 1992 to 2007. Using the estimated parameters, the price-cost margins on reader and advertiser sides under alternative supply models, competition or cooperation on each side of the market, are computed. After that, we perform non-nested statistical tests to select the supply model which has the best fit to the data. The empirical results show that the model of cooperation on reader side and competition on advertiser side has a better fit to the data than other alternative supply models.
