AbstractThis paper investigates how competition in the media affects the quality of news. In our model, demand for news depends on the market perception of the media's ability to receive correct information: it is positive if and only if news is potentially useful for the voting decision. When the media receives information which contradics commonly shared priors, it either reports this information or it confirms the priors: "most likely, my information is correct, but my potential buyers may be unable to assess the quality of news and attribute it according to common priors". We ask whether competition may help to elicit information from the media. Our answer is positive when news covers issues on which the priors are sufficiently precise, or the follow-up quality assessment is a likely event. However, when news concerns controversial issues and it is hardly possible to asses its quality, competitive pressures induce confirmatory reporting.
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Bibliographic InfoPaper provided by CIRPEE in its series Cahiers de recherche with number 0912.
Date of creation: 2009
Date of revision:
Competition in the media; quality of news; common priors; reputational cheap-talk;
Find related papers by JEL classification:
- L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
- L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-04-18 (All new papers)
- NEP-COM-2009-04-18 (Industrial Competition)
- NEP-CTA-2009-04-18 (Contract Theory & Applications)
- NEP-MIC-2009-04-18 (Microeconomics)
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