Time Scarcity and the Market for News
AbstractWe develop a general theory of news media. News consumers are time constrained and perform a (possibly subconscious) optimal search, given the amount of time they possess. Their utility functions are general and allow for complementarities over the amount of information they acquire on any given topic. Media outlets are aware of consumers' preferences and constraints, and aim to maximize readership. These outlets observe the news items of the day and decide on a ranking to provide to readers. They cannot falsify or misreport news. In the baseline model readers and outlets are unbiased and fully rational. We then derive basic properties of equilibria on these markets for news. In particular, equilibrium rankings need not be reader-efficient. Even in competitive markets, readers may read more than they would like to; they may read stories distinct from the ones they prefer and on topics that are different from the ones they consider to be important. Next, we derive implications on diverse aspects of new and traditional media. These include a rationale for tabloid news based on complementarities in preferences, a rationale for why readers switch to certain online media platforms as a way to circumvent inefficient rankings found in traditional media, and the derivation of a positive role for public media in restoring reader-efficient standards. Finally, we relate some of our findings to recent stylized facts, and brie y discuss political economy implications of the model.
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Bibliographic InfoPaper provided by Barcelona Graduate School of Economics in its series Working Papers with number 675.
Date of creation: Dec 2012
Date of revision:
media economics; media competition; information search; time preference; news ranking; digital media; internet; new and traditional media; public media; tabloid news; media bias;
Other versions of this item:
- D03 - Microeconomics - - General - - - Behavioral Economics; Underlying Principles
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-01-26 (All new papers)
- NEP-CUL-2013-01-26 (Cultural Economics)
- NEP-ICT-2013-01-26 (Information & Communication Technologies)
- NEP-MIC-2013-01-26 (Microeconomics)
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