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					  2nd Lear Conference on the Economics of Competition Law
                    Rome, June 7-8, 2007




Multisided Platforms and Market Power
Some empirical evidence



                       Marc Ivaldi
Content

 Printed media industries
 Market delineation
   Standard approach
   Model-based approach




                             2
Market definition in printed media industries

 Distinctive features
   Differentiated products
        Content (general vs specialized information)
        Quality (tabloids vs art magazines)
        Frequency
        Scope
          Local vs national
   Bidimensional products
      Readership
      Advertising
   Substitutes
      Other medias


                                                        3
Market definition in printed media industries

 Examples
   Differentiated products
      Recoletos / Unedisa case
        Dialy and non dialy publications
        General information, sport and financial papers
        Tabloids and quality press
      Gruner+Jahr / Financial Times / JV
      Ballarino / Grandi quotidiani
        Local and national publication (separate markets)
      Conclusion
        Demand side perspective
        Printed media markets segmented in tiny sub-markets


                                                             4
Market definition in printed media industries

 Examples
   Substitutability
      Recoletos / Unedisa case
      Newsquest Ltd / Independent News
      Conclusion : Not taken into account
        Written press distinct from other media products
             Why? Not the same depth and range of information
        However supply side arguments




                                                                 5
Market definition in printed media industries

 Examples
   Advertising
        Newspaper publishing decision
        Class Editori / Sole 24 Ore case
        Recoletos / Unedisa
        Conclusion
          Different types of advertising define different types of
           readers and vice-versa
          Readership and advertising are separate markets




                                                                      6
Market definition in printed media industries

 Methods
   Usually qualitative
   Now quantitative
      Archant Limited / Independent News and Media
       Limited
        Commission claims to have performed a SSNIP test
        Commission concludes that the relevant market is th
         local one




                                                               7
An econometric illustration

 Merger SOCPRESSE / Groupe Express-
  Expansion
   French weekly magazines of general
    information
   Decision : the merger has been authorized




                                                8
An econometric illustration

 Econometric analysis by the competition
  authority
   Individual demand are price inelastic
   Aggregate demand is elastic
   Conclusion
     Cross-price elasticities are small
     The market is larger??




                                            9
                                              100%




                                                0%
                                               10%
                                               20%
                                               30%
                                               40%
                                               50%
                                               60%
                                               70%
                                               80%
                                               90%
                               La
                                    V
                                         ie
             V                 Pè
                 al               le
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                     rs              r   in
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               ve            ue
                  l   O         lle
                        bs          s
                          er
                            va
                               te
                                  ur
                           Ex
                              pr
                                es
                                   s
                                                       Total Sales




                            Po
                                in
     Co                            t
        ur            Té
                                                  (Average – 1996-2001)




           rie            lé
                             ra
               rI               m
                                                Share of Unit Purchases in




                  nt
                    er            a
                       na
                          tio
                              na
                                 l
                      M
                         ar
                            ia
                                                                             An econometric illustration




                               nn
                   Pa             e
                      ris
                           M
                              atc
                                  h
              Fi
                ga                V
                      ro              SD
                           M
                            ag
                                 az
                                   in
                                      e
10
An econometric illustration




   Subscription   Unit purchase   Outside good


           …                …


  Titles           Titles


                                                 11
An econometric illustration

 Alternative model
    Accounts for differentiation



  ln( s j )  ln( s0 )   x j    j    p j    ln( s j m )
                                                 



     Relative                  Quality-Price          Differentiation
  market shares                   tradeoff                 effect




                                                                      12
An econometric illustration

 Alternative model
    Accounts for differentiation



  ln( s j )  ln( s0 )   x j    j    p j    ln( s j m )
                                                 

    Accounts for endogeneity
       First set of instruments : All exogenous variables +
        previous’ year circulation
       Second set of instruments : All exogenous variables +
        advertising revenue and its lagged value



                                                                      13
                          Estimation        Estimation with
                              without       advertising as an
                        advertising as an       instrument
                            instrument
Le Figaro Magazine           -0.36               -1.22
                            (0.001)             (0.003)
Le Nouvel Observateur        -0.31               -1.06
                            (0.000)             (0.001)
Le Point                     -0.28               -0.95
                            (0.000)             (0.001)
L’Express                    -0.28               -0.95
                            (0.001)             (0.002)
Paris Match                  -0.20               -0.67
                            (0.002)             (0.005)
Valeurs Actuelles            -0.36               -1.22
                            (0.044)             (0.148)         14
                        Estimation without   Estimation with
                         advertising as an   advertising as an
                            instrument          instrument
La Vie                        0.000               0.001
                             (0.000)             (0.000)
Le Figaro Magazine            0.041               0.137
                             (0.001)             (0.003)
Le Nouvel Observateur         0.008               0.025
                             (0.000)             (0.001)
Le Point                      0.006               0.020
                             (0.000)             (0.001)
L’Express                     0.008               0.027
                             (0.001)             (0.002)
Paris Match                   0.026               0.087
                             (0.002)             (0.005)
Valeurs Actuelles             0.001               0.002
                             (0.000)             (0.001)
VSD                           0.009               0.031          15
                             (0.001)             (0.002)
Econometric illustration ….

 …. of neglecting feedback effects between
  the two sides of the market
 This can translate in bad estimates of
  market power …




                                          16
Example:
The market for academic journals

 Academic journals = intermediary role
   Research output dissemination
   Cerification
 Academic journal = Two-sided structure




                                           17
Structure


 AUTHORS

0€

PUBLISHERS
             ARCHIVE
K€

LIBRARIES

0€

 READERS

                       18
Academic journals
 A model

     ln s j  ln s0  X j    I j   p j   ln s jg   j

                           Impact factor



                    I jt   I jt 1  Z j  u jt

 Main result: not recognizing the endogeneity of
  the impact factor yields zero correlation between
  the impact factor and the demand for journals !!
                                                                19
 Acadamic journals: main result



          Own Elasticity    Cross Elasticity    Marginal Cost     Mark Up (%)

          Mean     Median   Mean     Median    Mean      Median   Mean Median

Model 1   -29.02   -18.28   0.526     0.108    1058.64   645.10   9.80   6.92

Model 2   -52.27   -32.94   0.987     0.203    1081.26   668.69   5.56   3.85




                                                                          20
More general models


        yit  f  advit , xit , y0it ;  


        advit  h  pit , yit , y0it ;  
 Argentesi – Filistrucchi (2006)
 Kaiser – Wright (2006)
 Rysman (2004)

                                             21
More general models

 Argentesi – Filistrucchi (2006)
   Collusion on readership / Competition on
    advertisng




                                               22
Concluding remarks

 Market delineation under structural
  econometric provides a very differnt view
  of relevant markets
 Needs more work
   « Real » interaction effects
   Dynamics
   Sensitivity analysis
     Mark Rysman




                                          23

				
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posted:9/28/2011
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