But, speaking at a heated Stationers' Hall debate entitled Does size matter?, Robert Thomson said that the cost of producing both a tabloid and a broadsheet edition was secondary to pleasing his readers.
"The cost [of printing both] was not ruinous but the cost of the opportunity lost would have been ruinous," he said.
Simon Kelner, editor of The Independent, also insisted that the decision to end production of the larger format had been made in response to readers' tastes.
"We wouldn't have made the decision to drop the broadsheet on cost grounds. It would have been madness," he said.
In a debate chaired by Jenni Murray, host of Radio 4's Woman's Hour, and sponsored by Sun Chemical, Stora Enso and Fujifilm Graphic Systems, Guardian editor Alan Rusbridger praised his rivals for their move to the tabloid edition.
"I would like to applaud Simon and Robert for [switching to the compact format], but also to thank them for giving a great opportunity to us."
He showed a mock-up of The Guardian in the mid-size Berliner format it will adopt in 2006, describing it as "utterly beautiful".
Rusbridger accused The Independent's single-issue front pages, which are increasingly common since the switch, of mimicking established tabloids such as The Daily Mail.
Kelner retorted: "I find the idea insulting that our readers can't tell the difference between The Independent and The Daily Mail.
"The Guardian didn't go compact because it would have been third into the market. We beat it and The Times beat it so it was too late."
Kelner also said that the next newspaper revolution would be the rise of the "viewspaper", with breaking news reported on the internet and newspapers concentrating on comment and analysis.
Story by Josh Brooks