Home Papers on the price structure on print media markets Arbeiten zur Preisstruktur auf Printmedienmaerkten Price structure in two-sided markets: Evidence from the magazine industry (with Julian Wright) Paper download Abstract: We present and estimate a model of competition in a two-sided market: the market for magazine readership and advertising. Using data on magazines in Germany, we find evidence that magazines have properties of two-sided markets. The results are consistent with the perception that prices for readers are “subsidized” and that magazines make all their money from advertisers. Consistent with advertisers valuing readers more than readers value advertisements, our results imply that higher demand on the reader side increases ad rates, but that higher demand on the advertising side decreases cover prices. JEL classification: C33; L11 Keywords: Two-sided markets; Magazine markets; Advertising Status: published in International Journal of Industrial Organization When Pricing Below Marginal Cost Pays Off: Optimal Price Choice in a Media Market with Upfront Pricing Paper download Abstract: I derive a model of profit maximization for a print media firm with upfront advertising pricing. The model is estimated using detailed quarterly data on German women's magazines observed between I/1994 and IV/2004. Main empirical results are that (i) cover price increases lead to substantial reductions in advertising revenue, thereby offsetting possible corresponding gains in magazine sales revenue, (ii) magazines with particularly circulation-sensitive advertising revenues set cover prices well below marginal cost and (iii) marginal production cost decrease with own circulation but are unaffected by publishers' total printing volume. Keywords: magazines, cost estimation, twosided markets JEL classification: L11, C33 Status: submitted Home