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Review of Industrial Organization

, Volume 22, Issue 2, pp 121–138 | Cite as

Do Newspaper JOAs Charge Monopoly Advertising Rates?

  • Charles Romeo
  • Russell Pittman
  • Norman Familant
Article

Abstract

Conventional wisdom argues that all commercial and economic competition between two daily newspapers stops when they merge their advertising and printing capabilities to form a joint operating agreement (JOA). Clearly the JOA acts a monopolist in the sale of advertising, but there are two forces that may constrain the JOA to sell more advertising than a profit maximizing single paper monopolist would find optimal. First, there is the possibility of what is sometimes termed ``end game competition''. Disposition of assets from a JOA are often not determined until the JOA is near its termination date, and this may induce the weaker paper to maintain quality, both to improve its bargaining position and to keep open the possibility of remaining in the market as a competitor at the end of the JOA. Second, a daily paper arguably has to maintain a certain level of advertising and maintain a certain ``look'' and ``feel'' if it is to be considered a daily paper. This may constrain the JOA to sell more advertising and maintain a higher joint circulation than might be optimal for a single paper monopolist. We present econometric evidence that shows JOAs to have ad rates that are closer to those of competitive dailies than to those of single paper and 2-edition monopolists.

Joint Operating Agreements Newspaper Markets 

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Copyright information

© Kluwer Academic Publishers 2003

Authors and Affiliations

  • Charles Romeo
    • 1
  • Russell Pittman
    • 1
  • Norman Familant
    • 1
  1. 1.Department of JusticeEconomic Analysis Group U.SU.S.A

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