Mergers in two-sided markets

This issue recently received widespread attention in the United States with the proposal in 2003 by the Federal Communications Commission to relax ownership and cross-ownership laws in the media: rais- ing the market cap on the reach of television stations owned by the same conglomerate, and allowing. [...] The norm in this research is to assume that the merger will change the ownership patterns in the industry, but will not alter the type of equilibrium. [...] All that advertisers care about is the number and characteristics of readers at a newspaper, not the price of advertising in the rival newspaper.7 Thus the change in the advertising price per reader depends solely on the change in average reader characteristics. [...] In particular, a necessary condition for the switching consumer to yield negative value to the newspaper that they purchase is that the switching cost of the newspaper, c, is higher that the price charged to readers, pA. [...] The mean and median number of daily newspapers per county are respectively 3.4 and 3. The mean and median number of counties across which a newspaper circulates are respectively 12.3 and 5. 4 Background on the Canadian Mergers In this section we provide some historical background on the wave of newspa- per mergers in Canada in the late 1990s and also present aggregate statistics detailing the exte