Discussion Paper Series in Economics, Department of Economics, Norwegian School of Economics (NHH)
Hans Jarle Kind
Newspaper Differentiation and Investments in Journalism: The Role of Tax Policy.
(), Guttorm Schjelderup
() and Frank Stähler
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.
Keywords: Two-sided markets; ad-valorem taxes.; (follow links to similar papers)
JEL-Codes: D04; D43; H21; H22; L13; (follow links to similar papers)
26 pages, September 8, 2011
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