Resale Price Maintenance by Japanese Newspapers

In Japan, newspapers enjoy a special exemption from antimonopoly prohibitions against resale price maintenance (suppliers’ stipulations that bar downstream firms from price discounting), but are each required to set uniform prices throughout Japan. In fact, the newspapers have rarely changed their subscription prices in recent years, and the three leading national dailies, together accounting for about half the total industry circulation, all have set exactly the same price (3,925 yen per month). Papers with more local distribution tend to set lower prices. The Japan Newspaper Association has publicly supported the continuation of the special antitrust exemption for newspapers and indeed forestalled the adoption of a proposal in 2000 to drop it. Has the authorized resale price maintenance, and prohibition against prices that vary geographically, abetted price collusion among the national papers? And, if so, with what effect on the newspaper content, and on advertising sold by the newspapers? I construct estimates of the demand for subscriptions to and the demand for advertising in Japanese newspapers, and use these estimates to determine the likely effects of resale price maintenance on the prices and circulation of newspapers, the profits of newspapers, the gains from trade of their subscribers and advertisers, and on the structure of the newspaper industry. This work is guided by the recent advances in economic analysis of newspaper pricing and behavior of Argentesi and Filistrucchi (2007), Chandra and Collard-Wexler (2008), and Van Cayseele and Vanormelingen (2009).