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An A-level student uses game theory to explain why there were newspaper wars
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Newspaper Price Wars
By Daniel Sexton
Why Do Price Wars Occur?
Source: edEcon, June 2011
Four Firm Concentration Ratio = 85.3%
Why Do Price Wars Occur?
• News International Newspapers Ltd – 36.3%• Associated Newspapers – 21.7%• Trinity Mirror Plc – 13.8%• Express Newspapers Ltd – 13.5%• Telegraph Group Ltd – 8.4%• Guardian Newspapers Ltd – 3.1%• Independent Newspapers Ltd – 1.9%• Financial Times Ltd – 1.4%
How Do Price Wars Occur?
Price Market Share
£6 Million Each Y - £3.5 MillionX - £7 Million
Y - £7 MillionX - £3.5 Million £5 Million Each£0.80
£0.80
£1.00
£1.00Firm X’s Price
Firm Y’s Price
And if that doesn’t work…..Free Stuff!!!
Discounts!!!
Extras: Online/Apps!!!
Exclusive News & Stories!!!
Market Share
Collusion?
?
How Often Do Price Wars Occur?
Brand Loyalty!
Any Questions?
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