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Paying Positive to Go Negative: Advertisers' Competition and Media Reports

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  • A. Blasco
  • P. Pin
  • F. Sobbrio

Abstract

This paper analyzes a two-sided market for news where advertisers may pay a media outlet to conceal negative information about the quality of their own product (paying positive to avoid negative) and/or to disclose negative information about the quality of their competitors' products (paying positive to go negative). We show that whether advertisers have negative consequences on the accuracy of news reports or not ultimately depends on the extent of correlation among advertisers' products. Specifically, the lower the correlation among the qualities of the advertisers' products, the (weakly) higher the accuracy of the media outlet' reports. Moreover, when advertisers' products are correlated, a higher degree of competition in the market of the advertisers' products may decrease the accuracy of the media outlet's reports.

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File URL: http://www2.dse.unibo.it/wp/WP772.pdf
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Bibliographic Info

Paper provided by Dipartimento Scienze Economiche, Universita' di Bologna in its series Working Papers with number wp772.

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Date of creation: Jul 2011
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Handle: RePEc:bol:bodewp:wp772

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References

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  1. Fabrizio Germano, 2008. "On commercial media bias," Economics Working Papers 1133, Department of Economics and Business, Universitat Pompeu Fabra, revised Apr 2009.
  2. Guillaume Roger, 2010. "Two-Sided Competition and Differentiation (with an Application to Media)," Discussion Papers 2010-27, School of Economics, The University of New South Wales.
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  4. Rafael Di Tella & Ignacio Franceschelli, 2009. "Government Advertising and Media Coverage of Corruption Scandals," NBER Working Papers 15402, National Bureau of Economic Research, Inc.
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  6. Maria Petrova, 2009. "Newspapers and Parties: How Advertising Revenues Created an Independent Press," Working Papers w0131, Center for Economic and Financial Research (CEFIR).
  7. Fabrizio Germano & Martin Meier, 2010. "Concentration and self-censorship in commercial media," Economics Working Papers 1256, Department of Economics and Business, Universitat Pompeu Fabra.
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  9. Gabszewicz, Jean J & Laussel, Didier & Sonnac, Nathalie, 2002. " Press Advertising and the Political Differentiation of Newspapers," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 4(3), pages 317-34.
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  11. Timothy Besley & Andrea Prat, 2005. "Handcuffs for the Grabbing Hand? Media Capture and Government Accountability," STICERD - Political Economy and Public Policy Paper Series 07, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
  12. Dirk Bergemann & Alessandro Bonatti, 2010. "Targeting in Advertising Markets: Implications for Offline vs. Online Media," Levine's Working Paper Archive 661465000000000284, David K. Levine.
  13. Maria Petrova, 2010. "Mass Media and Special Interest Groups," Working Papers w0144, Center for Economic and Financial Research (CEFIR).
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  16. Poitras, Marc & Sutter, Daniel, 2009. "Advertiser pressure and control of the news: The decline of muckraking revisited," Journal of Economic Behavior & Organization, Elsevier, vol. 72(3), pages 944-958, December.
  17. A. Blasco & F. Sobbrio, 2011. "Competition and Commercial Media Bias," Working Papers wp767, Dipartimento Scienze Economiche, Universita' di Bologna.
  18. Matthew Gentzkow & Edward L. Glaeser & Claudia Goldin, 2006. "The Rise of the Fourth Estate. How Newspapers Became Informative and Why It Mattered," NBER Chapters, in: Corruption and Reform: Lessons from America's Economic History, pages 187-230 National Bureau of Economic Research, Inc.
  19. 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.
  20. Nelson, Philip, 1974. "Advertising as Information," Journal of Political Economy, University of Chicago Press, vol. 82(4), pages 729-54, July/Aug..
  21. Anthony Downs, 1957. "An Economic Theory of Political Action in a Democracy," Journal of Political Economy, University of Chicago Press, vol. 65, pages 135.
  22. 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.
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Cited by:
  1. Francesco Sobbrio, 2012. "A Citizen-Editors Model of News Media," RSCAS Working Papers 2012/61, European University Institute.
  2. Rafael Di Tella & Ignacio Franceschelli, 2009. "Government Advertising and Media Coverage of Corruption Scandals," NBER Working Papers 15402, National Bureau of Economic Research, Inc.
  3. Fabrizio Germano & Martin Meier, 2010. "Concentration and self-censorship in commercial media," Discussion Papers 1518, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  4. A. Blasco & F. Sobbrio, 2011. "Competition and Commercial Media Bias," Working Papers wp767, Dipartimento Scienze Economiche, Universita' di Bologna.

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