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  • February 2014
  • Article
  • Management Science

Responses to Entry in Multi-Sided Markets: The Impact of Craigslist on Local Newspapers

By: Robert Seamans and Feng Zhu
  • Format:Print
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Abstract

How do firms respond to entry in multi-sided markets? We address this question by studying the impact of Craigslist, a website providing classified-advertising services, on local U.S. newspapers. We exploit temporal and geographical variation in Craigslist's entry to show that newspapers with greater reliance on classified-ad revenue experience a larger drop in classified-ad rates after Craigslist's entry. The impact of Craigslist's entry on the classified-ad side appears to propagate to other sides of the newspapers' market. On the subscriber side, these newspapers experience an increase in subscription prices, a decrease in circulation, and an increase in differentiation from each other. On the display-ad side, affected newspapers experience a decrease in display-ad rates. We also find evidence that affected newspapers are less likely to make their content available online. Finally, we estimate that Craigslist's entry leads to $5 billion in year 2000 dollars in savings to classified-ad buyers during 2000–2007.

Keywords

Multi-sided Platforms; Market Entry And Exit; Web Sites; Newspapers; Advertising; Advertising Industry; Journalism And News Industry

Citation

Seamans, Robert, and Feng Zhu. "Responses to Entry in Multi-Sided Markets: The Impact of Craigslist on Local Newspapers." Management Science 60, no. 2 (February 2014): 476–493.
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About The Author

Feng Zhu

Technology and Operations Management
→More Publications

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    Digital Platforms: An Introduction

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    Gender Inequality in Research Productivity During the COVID-19 Pandemic

    By: Ruomeng Cui, Hao Ding and Feng Zhu
    • June 2020
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    Frenemies in Platform Markets: Heterogeneous Profit Foci as Drivers of Compatibility Decisions

    By: Ron Adner, Jianqing Chen and Feng Zhu
More from the Authors
  • Digital Platforms: An Introduction By: Chiara Farronato, Michael W. Toffel and Feng Zhu
  • Gender Inequality in Research Productivity During the COVID-19 Pandemic By: Ruomeng Cui, Hao Ding and Feng Zhu
  • Frenemies in Platform Markets: Heterogeneous Profit Foci as Drivers of Compatibility Decisions By: Ron Adner, Jianqing Chen and Feng Zhu
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