Time scarcity and the market for news
AbstractWe develop a theory of news coverage in environments of information abundance. News consumers are time-constrained and browse through news items that are available across competing outlets, choosing which ones to read or skip. Media firms are aware of consumers' preferences and constraints, and decide on rankings of news items that maximize their profits. We find that, even when readers and outlets are rational and unbiased and when markets are competitive, readers may read more than they would like to, and the stories they read may be significantly different from the ones they prefer. Next, we derive implications on diverse aspects of new and traditional media. These include a rationale for tabloid news, a theory of optimal advertisement placement in newscasts, and a justification for readers' migration to online media platforms in order to circumvent inefficient rankings found in traditional media. We then analyze methods for restoring reader-efficient standards and discuss the political economy implications of the theory.
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Bibliographic InfoPaper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 1348.
Date of creation: Dec 2012
Date of revision: Dec 2013
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Web page: http://www.econ.upf.edu/
Media competition; news ranking; political economy; scarcity of time;
Other versions of this item:
- D03 - Microeconomics - - General - - - Behavioral Microeconomics; 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
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