Are Online News Sites Inferior Goods?

Inferior Goods
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Anneke Zwart
Student (University), Netherlands

Are Online News Sites Inferior Goods?

🔥NEW Chyi and Yang (2009) did research among US citizens to investigate the economic nature of online newspapers. Although it was initially thought that online news would replace printed newspapers, the authors suggest that online news is an inferior good and printed news is a normal good. Actually, this finding makes sense because it explains why the following expectations about the newspaper industry are not always the reality:
  1. Cannibalization Effect: Although it was initially thought that the online availability of news would in the end replace the demand for print newspapers. This expected replacement is also called the “cannibalization effect”. However, over time it was recognized that there was no significant “cannibalization effect”. Indeed it was even found in a study that people who read a certain newspaper online also read that paper in a printed version. In other words, online newspapers have not become the alternative or the substitute for printed newspapers.
  2. Willingness to Pay: The willingness to pay seems to be much higher for printed newspapers than for online newspapers. It is difficult to find a main reason for this. It might have to do with the public nature of news. But it is certain that people react differently to online news compared to printed news. As a result, nowadays almost any online news source is free of charge.
Source: Chyi, H.I. and M. J. Yang (2009) “Is Online News an Inferior Good? Examining the Economic Nature of Online News among Users” Journalism & Mass Communication Quarterly Vol. 86, No. 3

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