Group for Research in Decision Analysis

Price wars in two-sided markets: The case of the UK quality newspapers

Stefan Behringer Universität Duisburg-Essen, Germany

This paper investigates the price war in the UK quality newspaper industry in the 1990s. We show that the empirical evidence is in accordance with a substantial change in the optimal finance mix of newspapers as advertising becomes the dominant source of newspaper revenue. The finding holds under weak theoretical assumptions. The evidence brought forward at the time is not sufficient to establish a case of predatory pricing as it has neglected the critical two-sidedness of the firms and necessitates further study.