Free daily newspapers: too strong incentives to print?

• Type: Article in International Scientific Journal
• Date: 2013

Authors

João Correia-da-Silva (Author) FEP; Joana Resende (Author) FEP

Journal

Title: Portuguese Economic Journal

Vol. 12 No. 2

Pages: 113-130

ISSN: 1617-982X

Publisher: Springer Nature

Indexing

ISI Web of Knowledge - 0 Citations

ISI Web of Science

Scopus - 0 Citations

Econlit

Scientific classification

FOS: Social sciences > Economics and Business

CORDIS: Social sciences > Economics

Other information

Authenticus ID: P-006-8R4

DOI: 10.1007/s10258-013-0090-2

Abstract (EN): 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.

Language: English

Type (Professor's evaluation): Scientific

No. of pages: 18