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Author Info

  • Matthew Ellman
  • Fabrizio Germano

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Abstract

We model the market for news as a two-sided market where newspapers sell news to readers who value accuracy and sell space to advertisers who value advert-receptive readers. We show that monopolistic newspapers under-report or bias news that sufficiently reduces advertiser profits. Newspaper competition generally reduces the impact of advertising. In fact, as the size of advertising grows, newspapers may paradoxically reduce advertiser bias, due to increasing competition for readers. However, advertisers can counter this effect of competition by committing to news-sensitive cut-off strategies, potentially inducing as much under-reporting as in the monopoly case.

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Bibliographic Info

Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 800.

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Date of creation: Dec 2004
Date of revision: Feb 2006
Handle: RePEc:upf:upfgen:800

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Web page: http://www.econ.upf.edu/

Related research

Keywords: Two-sided markets; advertising; media accuracy; media bias; media economics.;

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References

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  1. Simon P. Anderson & Stephen Coate, 2005. "Market Provision of Broadcasting: A Welfare Analysis," Review of Economic Studies, Oxford University Press, vol. 72(4), pages 947-972.
  2. GABSZEWICZ, Jean & LAUSSEL, Didier & SONNAC, Nathalie, 2002. "Attitudes toward advertising and price competition in the press industry," CORE Discussion Papers 2002026, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  3. Jeffrey Milyo & Tim Groseclose, 2005. "A Measure of Media Bias," Working Papers 0501, Department of Economics, University of Missouri, revised 25 Aug 2005.
  4. Besley, Tim & Prat, Andrea, 2006. "Handcuffs for the grabbing hand?: media capture and government accountability," Open Access publications from London School of Economics and Political Science http://eprints.lse.ac.uk/, London School of Economics and Political Science.
  5. Baron, David P., 2004. "Persistent Media Bias," Research Papers 1845r, Stanford University, Graduate School of Business.
  6. DeMarzo, Peter M. & Vayanos, Dimitri & Zwiebel, Jeffrey, 2003. "Persuasion bias, social influence, and uni-dimensional opinions," Open Access publications from London School of Economics and Political Science http://eprints.lse.ac.uk/, London School of Economics and Political Science.
  7. Gabszewicz, Jean J. & Laussel, Dider & Sonnac, Nathalie, 2001. "Press advertising and the ascent of the 'Pensee Unique'," European Economic Review, Elsevier, vol. 45(4-6), pages 641-651, May.
  8. Jorge A, Ferrando & Jean J, Gabszewicz & Didier Laussel & Nathalie Sonnac, 2004. "Two-Sided Network Effects and Competition : An Application to Media Industries," Working Papers 2004-09, Centre de Recherche en Economie et Statistique.
  9. Hawkins, Scott A & Hoch, Stephen J, 1992. " Low-Involvement Learning: Memory without Evaluation," Journal of Consumer Research, University of Chicago Press, vol. 19(2), pages 212-25, September.
  10. Jonathan Reuter & Eric Zitzewitz, 2006. "Do ADS Influence Editors? Advertising and Bias in the Financial Media," The Quarterly Journal of Economics, MIT Press, vol. 121(1), pages 197-227, 02.
  11. Simon P. Anderson, 2005. "Market Provision of Broadcasting: A Welfare Analysis," Review of Economic Studies, Wiley Blackwell, vol. 72(4), pages 947-972, October.
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Citations

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Cited by:
  1. Maria Petrova, 2010. "Mass Media and Special Interest Groups," Working Papers w0144, Center for Economic and Financial Research (CEFIR).
  2. Sobbrio, Francesco, 2009. "A Citizens-Editors Model of News Media," MPRA Paper 18213, University Library of Munich, Germany.
  3. Zilinsky, Jan, 2009. "Média, vlastníci a tlaky: súhrn poznatkov o trhu s informáciami
    [Media, owners and pressures: our understanding of the market for information]    ," MPRA Paper 13660, University Library of Munich, Germany.
  4. 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.
  5. Karen Moris, 2011. "La presse en tant que mécanisme de gouvernance disciplinaire," Revue Finance Contrôle Stratégie, revues.org, vol. 14(4), pages 21-66, December.
  6. Elena Panova, 2009. "Confirmatory News," Cahiers de recherche 0912, CIRPEE.
  7. Fabrizio Germano, 2008. "On commercial media bias," Economics Working Papers 1133, Department of Economics and Business, Universitat Pompeu Fabra, revised Apr 2009.
  8. Sobbrio, Francesco, 2009. "Indirect Lobbying and Media Bias," MPRA Paper 18215, University Library of Munich, Germany.
  9. Maria Petrova, 2009. "Newspapers and Parties: How Advertising Revenues Created an Independent Press," Working Papers w0131, Center for Economic and Financial Research (CEFIR).

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