Valuing New Goods in a Model with Complementarity: Online Newspapers
Gentzkow, Matthew. 2007. "Valuing New Goods in a Model with Complementarity: Online Newspapers."
American Economic Review,
Many important economic questions hinge on the extent to which new goods either
crowd out or complement consumption of existing products. Recent methods for
studying new goods rule out complementarity by assumption, so their applicability
to these questions has been limited. I develop a new model that relaxes this
restriction, and use it to study competition between print and online newspapers.
Using new micro data from Washington, DC, I estimate the relationship between the
print and online papers in demand, the welfare impact of the online paper's
introduction, and the expected impact of charging positive online prices. (JEL C25,
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