Introduction

Rapid technological change in media markets has highlighted the importance of delineating relevant markets in this industry. Indeed, the degree of substitutability among different newspapers, but also between newspapers and internet sites, or between different kinds of television or cable channels, is a key element in competition analysis.

Recent theoretical advances stress the two-sided character of this industry, which has repercussions for market definition. Media outlets compete not only for readership or audience but also for advertisers, who in turn are attracted by the possibility of reaching potential consumers. The advent of new media and recent technological advances in information transmission have an impact on the degree of substitutability between different media and also on the ways in which advertising messages are conveyed to the public. Therefore the evolution of media markets creates closer interconnections between different media services with regard to both the circulation side and the advertising side. Antitrust agencies and regulators should take into account the changing features of these markets when addressing issues of market definition and assessing the degree of substitutability between different media outlets.

At least three notions then should drive the definition of relevant markets in the press industry. The first one, just mentioned, is two-sidedness. The markets for news and advertising are closely linked by inter-market network externalities. Our conjecture is that failing to consider this link may lead to a biased estimation of own- and cross-price elasticities.