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Downs meets d’Aspremont and company: Convergence versus differentiation in politics and the media

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  • Guo, Wen-Chung
  • Lai, Fu-Chuan
  • Suen, Wing

Abstract

Media firms have incentives to differentiate their news products to soften price competition. When consumers value cognitive consistency between the news they read and the policies they support, politicians are induced to propose more polarized policies to conform to a polarized media landscape. A stronger commercial motive or a weaker preference for editorial neutrality in the media exacerbates this effect and causes party policies to become more extreme. We find that prices for news products are higher when consumers have a demand for cognitive consistency, despite the fact that maximal product differentiation does not hold for media firms.

Suggested Citation

  • Guo, Wen-Chung & Lai, Fu-Chuan & Suen, Wing, 2018. "Downs meets d’Aspremont and company: Convergence versus differentiation in politics and the media," International Journal of Industrial Organization, Elsevier, vol. 60(C), pages 96-125.
    • Handle: RePEc:eee:indorg:v:60:y:2018:i:c:p:96-125
    DOI: 10.1016/j.ijindorg.2018.08.002
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    More about this item

    Keywords

    Media positions; Political platforms; Polarization; Spatial competition; Cognitive consistency;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media

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