Two equal-sized newspapers have overlap circulation of 10% (10% of the subscribers subscribe to both newpapers). 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 outcome
This question was asked on Feb 19, 2011 and answered on Feb 19, 2011.
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