Business, 22.07.2020 04:01 zyreahunt4771

Two equal-sized newspapers have an overlap circulation of 10% (10% of the subscribers subscribe to both newspapers). Advertisers are willing to pay $24 to advertise in one newspaper but only $45 to advertise in both, because they're unwilling to pay twice to reach the same subscriber. Suppose the advertisers bargain by teling each newspaper that they're going to reach agreement with the other newspaper, whereby they pay the other newspaper $21 to advertise. According to the nonstrategic view of bargaining, each newspaper would earn with the advertisers. The total gain for the two newspapers from reaching an agreement is $ of the $21 in value added by reaching an agreement . Suppose the two newspapers merge. As such, the advertisers can no longer bargain by telling each newspaper that they're going to reach agreement with the other newspaper. Thus the total gains for the two parties (the advertisers and the merged newspapers) from reaching an agreement with the advertisers are $21.
According to the nonstrategi argaining, each merged newspaper will earn in an agreement with the advertisers. This gain to the merged newspaper isthan the total gains to the individual newspapers pre-meger.

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