Shi Young Lee, Professor, ChungYang University, Korea

Dixit and Nalebuff (1993) provided a simple game theoretic analysis where Time and Newsweek make their cover story decisions as a business strategy. This paper explores what determines their cover story decisions. The basic idea is that the relative market size of the potential cover stories and relative market power between Time and Newsweek are two important ingredients to determine the cover stories. The empirical analysis backs up the basic idea. If the relative market size (importance of news) is sufficiently large enough, then both magazines issue the same cover story. On the other hand, if the relative market power of Time is more relevant, then both magazines may issue the different cover stories. This result extends the hypothesis (example) drawn by Dixit & Nalebuff (1993).