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Advertising Spending and Media Bias: Evidence from News Coverage of Car Safety Recalls

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  • Graham Beattie

    (Loyola Marymount University, Los Angeles, California 90045)

  • Ruben Durante

    (ICREA, Universitat Pompeu Fabra, IPEG, Barcelona GSE, and CEPR, Barcelona, Spain 08002)

  • Brian Knight

    (Brown University, Providence, Rhode Island 02912; National Bureau of Economic Research, Cambridge, Massachusetts 02138)

  • Ananya Sen

    (Carnegie Mellon University, Pittsburgh, Pennsylvania 15213)

Abstract

Do mass media bias content in favor of advertisers? If so, what market conditions limit or exacerbate this bias? We examine the relationship between advertising by auto manufacturers in U.S. newspapers and news coverage of car safety recalls between 2000 and 2014. This context allows us to separate the influence of advertisers, who prefer less coverage, from that of readers, who prefer more information about the safety risks associated with the recalls. Consistent with theoretical predictions, we find that newspapers provide less coverage of recalls issued by manufacturers that advertised more regularly on their pages over the previous two years. The effect is especially pronounced for more severe recalls, which are more likely to hurt manufacturers’ reputations. Competition for readers from other newspapers mitigates proadvertiser bias, and competition for advertising by online platforms exacerbates it. We also present suggestive evidence that less news coverage of recalls is associated with more fatal car accidents. This paper was accepted by Joshua Gans, business strategy.

Suggested Citation

  • Graham Beattie & Ruben Durante & Brian Knight & Ananya Sen, 2021. "Advertising Spending and Media Bias: Evidence from News Coverage of Car Safety Recalls," Management Science, INFORMS, vol. 67(2), pages 698-719, February.
  • Handle: RePEc:inm:ormnsc:v:67:y:2021:i:2:p:698-719
    DOI: 10.1287/mnsc.2019.3567
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    Cited by:

    1. Ater, Itai & Yosef, Nir, 2018. "The Impact of Product Recalls on the Secondary Market:Evidence from Dieselgate," CEPR Discussion Papers 12899, C.E.P.R. Discussion Papers.
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    3. Inge van den Bijgaart & Davide Cerruti, 2020. "The effect of information on market activity; evidence from vehicle recalls," CER-ETH Economics working paper series 20/343, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    4. Adam Szeidl & Ferenc Szucs, 2021. "Media Capture Through Favor Exchange," Econometrica, Econometric Society, vol. 89(1), pages 281-310, January.

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    More about this item

    Keywords

    media bias; advertising; newspapers; car manufacturers; safety recalls;
    All these keywords.

    JEL classification:

    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics
    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising

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