Abstract
This paper provides an empirical examination of third degree price discrimination in the Swedish local newspaper markets. We measure the extent of price discrimination by the fraction of subscriptions that a newspaper sells at a discount. The results show that price discrimination is more prevalent in competitive markets and among newspapers with low market shares. We find weak evidence that newspapers operating in markets with larger inflows of new consumers, and those that cover diverse geographical areas, offer more discounts. Overall, our findings are consistent with predictions from recent theoretical work, including Chen (1997) and Villas-Boas (1999), which suggests that firms attempt to poach consumers from rivals by offering targeted discounts.