Review of Industrial Organization 22: 121–138, 2003.
© 2003 Kluwer Academic Publishers. Printed in the Netherlands.
Do Newspaper JOAs Charge Monopoly Advertising
, RUSSELL PITTMAN and NORMAN FAMILANT
Economic Analysis Group U.S. Department of Justice 600 E Street, NW–Suite 10000, Washington,
DC 20530, U.S.A.
Abstract. Conventional wisdom argues that all commercial and economic competition between two
daily newspapers stops when they merge their advertising and printing capabilities to form a joint
operating agreement (JOA). Clearly the JOA acts a monopolist in the sale of advertising, but there
are two forces that may constrain the JOA to sell more advertising than a proﬁt maximizing single
paper monopolist would ﬁnd optimal. First, there is the possibility of what is sometimes termed “end
game competition”. Disposition of assets from a JOA are often not determined until the JOA is near
its termination date, and this may induce the weaker paper to maintain quality, both to improve its
bargaining position and to keep open the possibility of remaining in the market as a competitor at
the end of the JOA. Second, a daily paper arguably has to maintain a certain level of advertising
and maintain a certain “look” and “feel” if it is to be considered a daily paper. This may constrain
the JOA to sell more advertising and maintain a higher joint circulation than might be optimal for a
single paper monopolist. We present econometric evidence that shows JOAs to have ad rates that are
closer to those of competitive dailies than to those of single paper and 2-edition monopolists.
Key words: Joint Operating Agreements, Newspaper Markets.
JEL Classiﬁcations: L11, Production, Pricing, and Market Structure L43, Antitrust Policy: Legal
Monopolies and Regulation or Deregulation L82, Industry Studies: Publishing.
When the U.S. Congress enacted the Newspaper Preservation Act (“NPA”) in
the stated purpose of the new law was to preserve the diversity of newspaper
voices in American cities, a diversity that had once been taken for granted but that
The U.S. Government right to retain a non-exclusive royalty-free license in and to any copyright
The authors are, respectively, Economist; Director, Economic Research; and Chief, Economic
Litigation Section; in the Economic Analysis Group, Antitrust Division, U.S. Department of Justice.
We thank Joe Farrell and an anonymous referee for helpful comments and we thank Thomas Dunne
for able assistance in constructing the dataset. The views expressed are those of the authors, and do
not necessarily represent the views of the Department of Justice. The usual further disclaimers apply
15 U.S.C. § 1803.