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News Aggregators and Competition among Newspapers on the Internet †

News Aggregators and Competition among Newspapers on the Internet † 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 D21, D22, L13, L82 ) http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png American Economic Journal: Microeconomics American Economic Association

News Aggregators and Competition among Newspapers on the Internet †

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Publisher
American Economic Association
Copyright
Copyright © 2016 by the American Economic Association
Subject
Articles
ISSN
1945-7685
eISSN
1945-7685
DOI
10.1257/mic.20140151
Publisher site
See Article on Publisher Site

Abstract

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 D21, D22, L13, L82 )

Journal

American Economic Journal: MicroeconomicsAmerican Economic Association

Published: Nov 1, 2016

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