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The Market for News

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Author Info
Sendhil Mullainathan
Andrei Shleifer

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Abstract

We investigate the market for news under two assumptions: that readers hold beliefs which they like to see confirmed, and that newspapers can slant stories toward these beliefs. We show that, on the topics where readers share common beliefs, one should not expect accuracy even from competitive media: competition results in lower prices, but common slanting toward reader biases. On topics where reader beliefs diverge (such as politically divisive issues), however, newspapers segment the market and slant toward extreme positions. Yet in the aggregate, a reader with access to all news sources could get an unbiased perspective. Generally speaking, reader heterogeneity is more important for accuracy in media than competition per se.

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File URL: http://hdl.handle.net/10.1257/0002828054825619
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File URL: http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=95&issue=4&article=6&issue_date=September2005
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Publisher Info
Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 95 (2005)
Issue (Month): 4 (September)
Pages: 1031-1053
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Handle: RePEc:aea:aecrev:v:95:y:2005:i:4:p:1031-1053

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  1. Djankov, Simeon & et al, 2003. "Who Owns the Media?," Journal of Law & Economics, University of Chicago Press, vol. 46(2), pages 341-81, October.
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  2. Goettler, Ronald L & Shachar, Ron, 2001. "Spatial Competition in the Network Television Industry," RAND Journal of Economics, The RAND Corporation, vol. 32(4), pages 624-56, Winter.
  3. Timothy Besley & Robin Burgess, 2002. "The Political Economy Of Government Responsiveness: Theory And Evidence From India," The Quarterly Journal of Economics, MIT Press, vol. 117(4), pages 1415-1451, November. [Downloadable!] (restricted)
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  4. Xavier Gabaix & David Laibson, 2005. "Shrouded Attributes, Consumer Myopia, and Information Suppression in Competitive Markets," NBER Working Papers 11755, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  5. Dyck, Alexander & Zingales, Luigi, 2002. "The Corporate Governance Role of the Media," CEPR Discussion Papers 3630, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  6. Gabszewicz, Jean J. & Laussel, Dider & Sonnac, Nathalie, 2001. "Press advertising and the ascent of the 'Pensee Unique'," European Economic Review, Elsevier, vol. 45(4-6), pages 641-651, May. [Downloadable!] (restricted)
  7. De Long, J Bradford, et al, 1990. " Positive Feedback Investment Strategies and Destabilizing Rational Speculation," Journal of Finance, American Finance Association, vol. 45(2), pages 379-95, June. [Downloadable!] (restricted)
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  8. Matthew A. Gentzkow & Jesse M. Shapiro, 2004. "Media, Education and Anti-americanism in the Muslim World," Journal of Economic Perspectives, American Economic Association, vol. 18(3), pages 117-133, Summer. [Downloadable!] (restricted)
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  9. Coase, R H, 1974. "The Market for Goods and the Market for Ideas," American Economic Review, American Economic Association, vol. 64(2), pages 384-91, May. [Downloadable!] (restricted)
  10. Joel L. Schrag, 1999. "First Impressions Matter: A Model Of Confirmatory Bias," The Quarterly Journal of Economics, MIT Press, vol. 114(1), pages 37-82, February. [Downloadable!] (restricted)
  11. Kevin Murphy & Andrei Shleifer, 2004. "Persuasion in Politics," NBER Working Papers 10248, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  12. Economides, Nicholas, 1986. "Minimal and maximal product differentiation in Hotelling's duopoly," Economics Letters, Elsevier, vol. 21(1), pages 67-71. [Downloadable!] (restricted)
  13. Besley, Timothy J. & Prat, Andrea, 2002. "Handcuffs for the Grabbing Hand? Media Capture and Government Accountability," CEPR Discussion Papers 3132, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  14. Esther Gal-Or & Anthony Dukes, 2003. "Minimum Differentiation in Commercial Media Markets," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 12(3), pages 291-325, 09. [Downloadable!] (restricted)
  15. Stromberg, David, 2001. "Mass media and public policy," European Economic Review, Elsevier, vol. 45(4-6), pages 652-663, May. [Downloadable!] (restricted)
  16. Edward L. Glaeser, 2005. "The Political Economy of Hatred," The Quarterly Journal of Economics, MIT Press, vol. 120(1), pages 45-86, January.
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  17. Baron, David P., 2004. "Persistent Media Bias," Research Papers 1845r, Stanford University, Graduate School of Business. [Downloadable!]
  18. Spence, A Michael & Owen, Bruce, 1977. "Television Programming, Monopolistic Competition, and Welfare," The Quarterly Journal of Economics, MIT Press, vol. 91(1), pages 103-26, February. [Downloadable!] (restricted)
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