Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/52470
Authors: 
Kind, Hans Jarle
Schjelderup, Guttorm
Stähler, Frank
Year of Publication: 
2011
Series/Report no.: 
CESifo working paper: Industrial Organisation 3582
Abstract: 
Many countries levy reduced-rate indirect taxes on newspapers, with proclaimed policy goals of stimulating investment in journalism and ensuring low newspaper prices. However, by taking into account the fact that the media industry operates in two-sided markets, we find the paradoxical result that the consequences of a low-tax regime might be quite the opposite; low investments and high prices. We also show that the low-tax regime tends to increase newspaper differentiation. If the advertising market is relatively small, the newspapers might invest too little in journalism and be too differentiated from a social point of view. In this case a tax increase will be welfare-enhancing.
Subjects: 
two-sided markets
ad-valorem taxes
JEL: 
D40
D43
H21
H22
L13
Document Type: 
Working Paper

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