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  • Matthew Ellman
  • Fabrizio Germano

Abstract

We model the market for news as a two-sided market where newspapers sell news to readers who value accuracy, and sell space to advertisers who value advert-receptive readers. We show that a monopoly newspaper under-reports or biases news that sufficiently reduces advertiser profits, whereas in the duopoly case, newspapers may paradoxically increase accuracy as the size of advertisers grows. We then show how advertisers can thwart this competitive effect on newspaper accuracy by committing to certain cut-off strategies, potentially inducing the same level of under-reporting as in the monopoly case.

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Bibliographic Info

Paper provided by Barcelona Graduate School of Economics in its series Working Papers with number 149.

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Date of creation: Oct 2004
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Handle: RePEc:bge:wpaper:149

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Keywords: Two-sided markets; advertising; media accuracy; media bias; media economics;

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References

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  1. GABSZEWICZ, Jean J. & LAUSSEL, Didier & SONNAC, Nathalie, . "Press advertising and the ascent of the `Pensée Unique'," CORE Discussion Papers RP, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) -1512, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  2. Simon P. Anderson & Stephen Coate, 2003. "Market Provision of Broadcasting: A Welfare Analysis," Virginia Economics Online Papers 358, University of Virginia, Department of Economics.
  3. Baron, David P., 2004. "Persistent Media Bias," Research Papers, Stanford University, Graduate School of Business 1845r, Stanford University, Graduate School of Business.
  4. Timothy Besley & Andrea Prat, 2006. "Handcuffs for the Grabbing Hand? Media Capture and Government Accountability," American Economic Review, American Economic Association, American Economic Association, vol. 96(3), pages 720-736, June.
  5. Jorge A, Ferrando & Jean J, Gabszewicz & Didier Laussel & Nathalie Sonnac, 2004. "Two-Sided Network Effects and Competition : An Application to Media Industries," Working Papers, Centre de Recherche en Economie et Statistique 2004-09, Centre de Recherche en Economie et Statistique.
  6. Peter M. DeMarzo & Dimitri Vayanos & Jeffrey Zwiebel, 2003. "Persuasion bias, social influence, and uni-dimensional opinions," LSE Research Online Documents on Economics, London School of Economics and Political Science, LSE Library 454, London School of Economics and Political Science, LSE Library.
  7. Jonathan Reuter & Eric Zitzewitz, 2005. "Do Ads Influence Editors? Advertising and Bias in the Financial Media," Finance, EconWPA 0501003, EconWPA.
  8. GABSZEWICZ, Jean & LAUSSEL, Didier & SONNAC, Nathalie, 2002. "Attitudes toward advertising and price competition in the press industry," CORE Discussion Papers, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) 2002026, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  9. Jeffrey Milyo & Tim Groseclose, 2005. "A Measure of Media Bias," Working Papers, Department of Economics, University of Missouri 0501, Department of Economics, University of Missouri, revised 25 Aug 2005.
  10. Hawkins, Scott A & Hoch, Stephen J, 1992. " Low-Involvement Learning: Memory without Evaluation," Journal of Consumer Research, University of Chicago Press, University of Chicago Press, vol. 19(2), pages 212-25, September.
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Citations

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Cited by:
  1. Li, Ming & Tymofiy Mylovanov, 2009. "Credibility for Sale: the Effect of Disclosure on Information Acquisition and Transmission," Working Papers, Concordia University, Department of Economics 09008, Concordia University, Department of Economics, revised Oct 2009.
  2. Dewenter, Ralf & Heimeshoff, Ulrich, 2012. "More ads, more revs? Is there a media bias in the likelihood to be reviewed?," DICE Discussion Papers, Heinrich‐Heine‐Universität Düsseldorf, Düsseldorf Institute for Competition Economics (DICE) 57, Heinrich‐Heine‐Universität Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
  3. Petrova, Maria, 2012. "Mass media and special interest groups," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 84(1), pages 17-38.
  4. Elena Panova, 2009. "Confirmatory News," Cahiers de recherche, CIRPEE 0912, CIRPEE.
  5. Sobbrio, Francesco, 2009. "Indirect Lobbying and Media Bias," MPRA Paper 18215, University Library of Munich, Germany.
  6. Fabrizio Germano, 2008. "On commercial media bias," Economics Working Papers, Department of Economics and Business, Universitat Pompeu Fabra 1133, Department of Economics and Business, Universitat Pompeu Fabra, revised Apr 2009.
  7. Sobbrio, Francesco, 2009. "A Citizens-Editors Model of News Media," MPRA Paper 18213, University Library of Munich, Germany.
  8. Zilinsky, Jan, 2009. "Média, vlastníci a tlaky: súhrn poznatkov o trhu s informáciami
    [Media, owners and pressures: our understanding of the market for information]
    ," MPRA Paper 13660, University Library of Munich, Germany.
  9. Karen Moris, 2011. "La presse en tant que mécanisme de gouvernance disciplinaire," Revue Finance Contrôle Stratégie, revues.org, revues.org, vol. 14(4), pages 21-66, December.
  10. Dewenter, Ralf & Heimeshoff, Ulrich, 2011. "Media Bias and Advertising: Evidence from German Car Magazines," Annual Conference 2011 (Frankfurt, Main): The Order of the World Economy - Lessons from the Crisis, Verein für Socialpolitik / German Economic Association 48691, Verein für Socialpolitik / German Economic Association.
  11. Maria Petrova, 2009. "Newspapers and Parties: How Advertising Revenues Created an Independent Press," Working Papers, Center for Economic and Financial Research (CEFIR) w0131, Center for Economic and Financial Research (CEFIR).

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