Question

3. Two equal-sized newspapers have overlap circulation of 10% (10% of the subscribers subscribe to both newspapers). Advertisers are willing to pay $10 to advertise in one newspaper but only $19 to advertise in both, because they’re unwilling to pay twice to reach the same subscriber. What’s the likely bargaining negotiation outcome if the advertisers bargain by telling each newspaper that they’re going to reach agreement with the other newspaper, so the gains to reaching agreement are only $9? Suppose the two newspapers merge. What is the likely post-merger bargaining outcome?

Answer 1

Answer:

if both the company integrates together, then this result may not be feasible and marketers must pay the firm's $19.

Explanation:

For one news paper, advertisers were willing to pay $10 for ads.

They were prepared to pay $19 to advertised in both news papers

If somehow marketers exploit and persuade the newspaper with which they negotiate on $10 they'll reach an agreement with profits and that at $9 from other newspaper as well, and if this approach works, then advertisers pay just $9 for both newspapers, which is equivalent to $9+$9=$18

Furthermore, if both the company integrates together, then this result may not be feasible and marketers must pay the firm's $19.

The company's merges give them marketability to influence and decide the cost to enhance the competitiveness of the company as competition decreases. The newspaper now has market dominance, and so it may not work to compromise tactics used by marketers. In other words, there are many more advertisers on the market than the newspaper available.