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Concentration and self-censorship in commercial media

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  • Germano, Fabrizio
  • Meier, Martin

Abstract

Given that over half the revenues of global newspaper publishing come from advertising (80% in the US and 57% in OECD countries, OECD, 2010), we study how media firms internalize the effect of their own coverage on advertisers' sales and hence on their own advertising revenues. We show, within a framework of non-localized, Hotelling-type competition among arbitrary numbers of media firms and outlets, that (i) topics sensitive to advertisers can be underreported by all outlets in the market, (ii) underreporting tends to increase with the concentration of ownership, and (iii) adding outlets, while keeping the number of owners fixed, can further increase the bias. We argue that self-censorship can potentially cover a wide range of topics and generate empirically large externalities.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Public Economics.

Volume (Year): 97 (2013)
Issue (Month): C ()
Pages: 117-130

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Handle: RePEc:eee:pubeco:v:97:y:2013:i:c:p:117-130

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Web page: http://www.elsevier.com/locate/inca/505578

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Keywords: Media economics; Media consolidation; Media markets; Advertising; Commercial media bias;

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References

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  1. Bart J. Bronnenberg & Jean-Pierre H. Dube & Matthew Gentzkow, 2010. "The Evolution of Brand Preferences: Evidence from Consumer Migration," NBER Working Papers 16267, National Bureau of Economic Research, Inc.
  2. Caroline Elliott, 2001. "A Cointegration Analysis of Advertising and Sales Data," Review of Industrial Organization, Springer, vol. 18(4), pages 417-426, June.
  3. De Smet, Dries & Vanormelingen, Stijn, 2012. "The Advertiser is Mentioned Twice. Media Bias in Belgian Newspapers," Working Papers 2012/05, Hogeschool-Universiteit Brussel, Faculteit Economie en Management.
  4. Jonathan Reuter & Eric Zitzewitz, 2005. "Do Ads Influence Editors? Advertising and Bias in the Financial Media," Finance 0501003, EconWPA.
  5. Matthew Ellman & Fabrizio Germano, 2009. "What do the Papers Sell? A Model of Advertising and Media Bias," Economic Journal, Royal Economic Society, vol. 119(537), pages 680-704, 04.
  6. Marco Gambaro and Riccardo Puglisi, 2010. "What Do Ads Buy? Daily Coverage of Listed Companies on the Italian Press," RSCAS Working Papers 2010/26, European University Institute.
  7. A. Blasco & P. Pin & F. Sobbrio, 2011. "Paying Positive to Go Negative: Advertisers' Competition and Media Reports," Working Papers wp772, Dipartimento Scienze Economiche, Universita' di Bologna.
  8. Lisa George & Joel Waldfogel, 2003. "Who Affects Whom in Daily Newspaper Markets?," Journal of Political Economy, University of Chicago Press, vol. 111(4), pages 765-784, August.
  9. Yongmin Chen & Michael H. Riordan, 2007. "Price and Variety in the Spokes Model," Economic Journal, Royal Economic Society, vol. 117(522), pages 897-921, 07.
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Citations

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Cited by:
  1. Fabrizio Germano, 2008. "On commercial media bias," Economics Working Papers 1133, Department of Economics and Business, Universitat Pompeu Fabra, revised Apr 2009.
  2. Jesse M. Shapiro, 2014. "Special Interests and the Media: Theory and an Application to Climate Change," NBER Working Papers 19807, National Bureau of Economic Research, Inc.
  3. A. Blasco & F. Sobbrio, 2011. "Competition and Commercial Media Bias," Working Papers wp767, Dipartimento Scienze Economiche, Universita' di Bologna.
  4. Larbi Alaoui & Fabrizio Germano, 2012. "Time Scarcity and the Market for News," Working Papers 675, Barcelona Graduate School of Economics.
  5. Rudiger, Jesper, 2013. "Cross-Checking the Media," MPRA Paper 51786, University Library of Munich, Germany.
  6. Francesco Sobbrio, 2012. "A Citizen-Editors Model of News Media," RSCAS Working Papers 2012/61, European University Institute.
  7. A. Blasco & P. Pin & F. Sobbrio, 2011. "Paying Positive to Go Negative: Advertisers' Competition and Media Reports," Working Papers wp772, Dipartimento Scienze Economiche, Universita' di Bologna.

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