Nikrooz Nasr Esfahani, and Doh-Shin Jeon, “News Aggregators and Competition Among Newspapers in the Internet”, IDEI Working Paper, n. 770, April 1, 2013, revised July 16, 2014.
We study how the presence of a news aggregator affects quality choices of newspapers competing on the Internet. To provide a microfoundation for the role of the aggregator, we build a model of multiple issues where each newspaper chooses quality on each issue. This model captures the "business-stealing effect" and the "readership expansion effect" of the aggregator. We find that the presence of the aggregator leads newspapers to specialize in news coverage, changes quality choices from strategic substitutes to strategic complements and is likely to increase the quality of newspapers and social welfare, with an ambiguous effect on newspapers’ profits.
- D21: Firm Behavior: Theory
- D43: Oligopoly and Other Forms of Market Imperfection
- L13: Oligopoly and Other Imperfect Markets
- L82: Entertainment • Media