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Media Mergers and Media Bias with Rational Consumers

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  • Anderson, Simon P.
  • McLaren, John

Abstract

We present an economic model of media bias and media mergers. Media owners have political motives as well as profit motives, and can influence public opinion by withholding information that is pejorative to their political agenda - provided that their agenda is not too far from the political mainstream. This is true even with rational consumers who understand the media owners’ biases, because the public do not know how much information the news organizations have and so do not know when news is being withheld. In line with conventional wisdom, this problem can be undone by competition; but competition can be defeated in equilibrium by media mergers that enhance profits at the expense of the public interest. We thus derive a motive for media merger policy that is completely distinct from the motives behind conventional antitrust. While media bias may reduce the profit incentives to merge, media markets nonetheless err to being insufficiently competitive, and the consequences of merger are more severe than in other markets.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 7768.

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Date of creation: Mar 2010
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Handle: RePEc:cpr:ceprdp:7768

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Keywords: Information withholding; market for news; media bias; media mergers;

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References

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Citations

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Cited by:
  1. Larcinese, Valentino & Puglisi, Riccardo & Snyder Jr., James M., 2011. "Partisan bias in economic news: Evidence on the agenda-setting behavior of U.S. newspapers," Journal of Public Economics, Elsevier, vol. 95(9-10), pages 1178-1189, October.
  2. Oliver Budzinski, 2008. "Europäische Medienmärkte: Die Rolle der Wettbewerbspolitik," MAGKS Papers on Economics 200806, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  3. Francesco Sobbrio, 2012. "A Citizen-Editors Model of News Media," RSCAS Working Papers 2012/61, European University Institute.
  4. Petrova, Maria, 2012. "Mass media and special interest groups," Journal of Economic Behavior & Organization, Elsevier, vol. 84(1), pages 17-38.
  5. Matthew Gentzkow & Jesse M. Shapiro & Daniel F. Stone, 2014. "Media Bias in the Marketplace: Theory," NBER Working Papers 19880, National Bureau of Economic Research, Inc.
  6. A. Blasco & F. Sobbrio, 2011. "Competition and Commercial Media Bias," Working Papers wp767, Dipartimento Scienze Economiche, Universita' di Bologna.
  7. Matthew Gentzkow & Jesse M. Shapiro & Michael Sinkinson, 2012. "Competition and Ideological Diversity: Historical Evidence from US Newspapers," NBER Working Papers 18234, National Bureau of Economic Research, Inc.
  8. Sobbrio, Francesco, 2009. "Indirect Lobbying and Media Bias," MPRA Paper 18215, University Library of Munich, Germany.
  9. Piolatto, A. & Schuett, F., 2013. "Media Competition and Electoral Politics," Discussion Paper 2013-072, Tilburg University, Center for Economic Research.
  10. Anthony J. Dukes, 2005. "Economic Perspectives on Media Mergers and Consolidation," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 74(3), pages 38-48.
  11. Guglielmo Barone & Francesco D'Acunto & Gaia Narciso, 2011. "Telecracy: Testing for Channels of Persuasion," Trinity Economics Papers tep0412, Trinity College Dublin, Department of Economics.
  12. LI, Ming & MYLOVANOV, Tymofiy, 2010. "Credibility for Sale - The Effect of Disclosure on Information Acquisition and Transmission," Cahiers de recherche 08-2010, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
  13. Sobbrio, Francesco, 2009. "A Citizens-Editors Model of News Media," MPRA Paper 18213, University Library of Munich, Germany.
  14. Francesco Sobbrio, 2013. "Citizen-Editors' Endogenous Information Acquisition and News Accuracy," DISCE - Working Papers del Dipartimento di Economia e Finanza def5, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
  15. Riccardo Puglisi & James M. Snyder, Jr., 2008. "Media Coverage of Political Scandals," NBER Working Papers 14598, National Bureau of Economic Research, Inc.

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