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Media Bias When Advertisers Have Bargaining Power

Author

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  • Wen-Chung Guo
  • Fu-Chuan Lai

Abstract

This article establishes a 2-sided media market in which readers have heterogeneous beliefs, media outlets choose their reporting biases, and advertisement prices are determined by bargaining between media outlets and advertisers. The authors have shown that the presence of advertisers strengthens the reporting bias. The bias is increasing in the advertisers' bargaining power and is generally stronger if the advertisers can advertise in multiple outlets. Finally, the authors present an extension of the model on the formation of joint operating agreements for advertising sales among competing newspapers and show that the media bias will be mitigated.

Suggested Citation

  • Wen-Chung Guo & Fu-Chuan Lai, 2014. "Media Bias When Advertisers Have Bargaining Power," Journal of Media Economics, Taylor & Francis Journals, vol. 27(3), pages 120-136, September.
  • Handle: RePEc:taf:jmedec:v:27:y:2014:i:3:p:120-136
    DOI: 10.1080/08997764.2014.931861
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    Cited by:

    1. Jia, Ming & Ruan, Hongfei & Zhang, Zhe, 2017. "How rumors fly," Journal of Business Research, Elsevier, vol. 72(C), pages 33-45.
    2. Sendhil Mullainathan & Andrei Shleifer, 2005. "The Market for News," American Economic Review, American Economic Association, vol. 95(4), pages 1031-1053, September.
    3. Pannicke, Julia, 2015. "Media bias in women's magazines: Do advertisements influence editorial content?," Ilmenau Economics Discussion Papers 99, Ilmenau University of Technology, Institute of Economics.
    4. Mullainathan, Sendhil & Shleifer, Andrei, 2005. "The Market for News," Scholarly Articles 33078973, Harvard University Department of Economics.

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