Free daily newspapers: too strong incentives to print?

Correia da silva, Joao and Resende, Joana (2013) Free daily newspapers: too strong incentives to print? Portuguese Economic Journal, 12 (2). pp. 113-130.

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Official URL: http://tse-fr.eu/pub/30093

Abstract

A free daily newspaper distributes news to readers and sells ad-space to advertisers, having private information about its audience. For a given number of distributed copies, depending on the type of audience (favorable or unfavorable), the newspaper may either have a large readership or a small readership. A large readership provides a greater return to advertisers, because ads are visualized by more people. A favorable audience has also the advantage of requiring a lower distribution cost (for a given number of distributed copies), because readers are willing to exert more effort to obtain a copy of the free newspaper and are less likely to reject a copy that is handed to them. We find that when the audience is unfavorable, the number of distributed copies and the price of ad-space coincide with those of the perfect information scenario. In contrast, if the audience is favorable, the newspaper prints extra copies to send a credible signal to the advertisers that the audience is favorable. Overprinting is not necessarily welfare-detrimental since readers benefit from the existence of additional copies

Item Type: Article
Language: English
Date: August 2013
Refereed: Yes
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Site: UT1
Date Deposited: 22 Apr 2016 14:42
Last Modified: 07 Mar 2018 13:23
OAI ID: oai:tse-fr.eu:30093
URI: http://publications.ut-capitole.fr/id/eprint/19392

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