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What do the Papers Sell? A Model of Advertising and Media Bias

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  • Matthew Ellman
  • Fabrizio Germano

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. In this setting, monopolistic newspapers under-report or bias news that sufficiently reduces advertiser profits. Paradoxically, increasing the size of advertising eventually leads competing newspapers to reduce advertiser bias. Nonetheless, advertisers can counter this effect if able to commit to news-sensitive cut-off strategies, potentially inducing as much bias as in the monopoly case. We use these results to explain contrasting historical and recent evidence on commercial bias and influence in the media. Copyright © The Author(s). Journal compilation © Royal Economic Society 2009.

Suggested Citation

  • 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, April.
    • Handle: RePEc:ecj:econjl:v:119:y:2009:i:537:p:680-704
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