Price Discrimination as Evidence of Newspaper Chain Market Power

Abstract

This study compares costs charged to advertisers by a sample of 51 Gannett newspapers, as compared with a matched set of independently-owned newspapers, controlling for circulation and other variables. The Gannett group charged a national advertising markup of about 10% more than did the independent newspapers, providing evidence of the power of a strong, well managed group to influence national marketplace prices. There is evidence that power is more important than managerial ability in setting prices. The study suggests that the narrow, local focus of most antitrust law cases involving big media groups should be broadened to reflect a national perspective.