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Media, fake news, and debunking

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  • Ngo Van Long
  • Martin Richardson
  • Frank Stahler

Abstract

We construct a Hotelling-type model of two media providers, each of whom can issue fake and/or real news and each of whom can invest in the debunking of their rival's fake news. The model assumes that consumers have an innate preference for one provider or the other and value real news. However, that valuation varies according to their bias favoring one provider or the other. We demonstrate a unique subgame perfect Nash equilibrium in which only one firm issues fake news and we show, in this setting, that increased polarization of consumers - represented by a wider distribution - increases the prevalence of both fake news and debunking expenditures and is welfare reducing. We also show, interalia, that a stronger preference by consumers for their preferred provider lowers both fake news and debunking. Finally, we compare monopoly and duopoly market structures in terms of "fake news" provision and show that a public news provider can be welfare improving.

Suggested Citation

  • Ngo Van Long & Martin Richardson & Frank Stahler, 2018. "Media, fake news, and debunking," ANU Working Papers in Economics and Econometrics 2018-659, Australian National University, College of Business and Economics, School of Economics.
    • Handle: RePEc:acb:cbeeco:2018-659
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    File URL: https://www.cbe.anu.edu.au/researchpapers/econ/wp659.pdf
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    References listed on IDEAS

    as
    1. Jimmy Chan & Wing Suen, 2008. "A Spatial Theory of News Consumption and Electoral Competition," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 75(3), pages 699-728.
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    3. Barrera, Oscar & Guriev, Sergei & Henry, Emeric & Zhuravskaya, Ekaterina, 2020. "Facts, alternative facts, and fact checking in times of post-truth politics," Journal of Public Economics, Elsevier, vol. 182(C).
    4. Hunt Allcott & Matthew Gentzkow, 2017. "Social Media and Fake News in the 2016 Election," Journal of Economic Perspectives, American Economic Association, vol. 31(2), pages 211-236, Spring.
    5. Martin Richardson, 2017. "Commercial Broadcasting and Local Content: Cultural Quotas, Advertising and Public Stations," World Scientific Book Chapters, in: Dimensions of Trade Policy, chapter 3, pages 41-71, World Scientific Publishing Co. Pte. Ltd..
    6. Sendhil Mullainathan & Andrei Shleifer, 2005. "The Market for News," American Economic Review, American Economic Association, vol. 95(4), pages 1031-1053, September.
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    More about this item

    Keywords

    fake news; media; debunking;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media

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