IDEAS home Printed from https://ideas.repec.org/p/aim/wpaimx/1552.html
   My bibliography  Save this paper

Time Scarcity and the Market for News

Author

Abstract

We develop a theory of news coverage in environments of information abundance that include both new and traditional news media, from online and print newspapers to radio and television. News consumers are time-constrained and browse through news items that are available across competing outlets, choosing which outlets to access and which stories to read or skip. Media firms are aware of consumers’ preferences and constraints, and decide on rankings of news items that maximize their profits. We find that the news consumed in equilibrium is highly sensitive to the details of the environment. We show that even when readers and outlets are rational and unbiased, readers may consume more than they would like to, and the news items they consume may be significantly different from the ones they prefer. Important news items may be crowded out. Next, we derive implications on diverse aspects of current media, including a rationale for tabloid news, a rationale for why readers prefer like-minded news, and how advertising can contribute to crowding out news. We also analyze methods for restoring reader-efficient standards and discuss the political economy implications of the theory.

Suggested Citation

  • Larbi Alaoui & Fabrizio Germano, 2015. "Time Scarcity and the Market for News," AMSE Working Papers 1552, Aix-Marseille School of Economics, France, revised 27 Dec 2015.
  • Handle: RePEc:aim:wpaimx:1552
    as

    Download full text from publisher

    File URL: http://www.amse-aixmarseille.fr/sites/default/files/_dt/2012/wp_2015_-_nr_52.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Reis, Ricardo, 2006. "Inattentive consumers," Journal of Monetary Economics, Elsevier, vol. 53(8), pages 1761-1800, November.
    2. Dirk Bergemann & Alessandro Bonatti, 2010. "Targeting in Advertising Markets: Implications for Offline vs. Online Media," Cowles Foundation Discussion Papers 1758, Cowles Foundation for Research in Economics, Yale University.
    3. Jimmy Chan & Wing Suen, 2008. "A Spatial Theory of News Consumption and Electoral Competition," Review of Economic Studies, Oxford University Press, vol. 75(3), pages 699-728.
    4. Matthew Gentzkow & Jesse M. Shapiro, 2006. "Media Bias and Reputation," Journal of Political Economy, University of Chicago Press, vol. 114(2), pages 280-316, April.
    5. Matthew Gentzkow & Jesse M. Shapiro, 2010. "What Drives Media Slant? Evidence From U.S. Daily Newspapers," Econometrica, Econometric Society, vol. 78(1), pages 35-71, January.
    6. Hong, Sounman, 2012. "Online news on Twitter: Newspapers’ social media adoption and their online readership," Information Economics and Policy, Elsevier, vol. 24(1), pages 69-74.
    7. Piolatto, Amedeo & Schuett, Florian, 2015. "Media competition and electoral politics," Journal of Public Economics, Elsevier, vol. 130(C), pages 80-93.
    8. Simon P. Anderson & André de Palma, 2012. "Competition for attention in the Information (overload) Age," RAND Journal of Economics, RAND Corporation, vol. 43(1), pages 1-25, March.
    9. Susan Athey & Emilio Calvano & Joshua S. Gans, 2018. "The Impact of Consumer Multi-homing on Advertising Markets and Media Competition," Management Science, INFORMS, vol. 64(4), pages 1574-1590, April.
    10. Alexandre Cornière & Greg Taylor, 2014. "Integration and search engine bias," RAND Journal of Economics, RAND Corporation, vol. 45(3), pages 576-597, September.
    11. Blasco, Andrea & Sobbrio, Francesco, 2012. "Competition and commercial media bias," Telecommunications Policy, Elsevier, vol. 36(5), pages 434-447.
    12. Matthew Gentzkow & Jesse M. Shapiro, 2008. "Competition and Truth in the Market for News," Journal of Economic Perspectives, American Economic Association, vol. 22(2), pages 133-154, Spring.
    13. Chrysanthos Dellarocas & Zsolt Katona & William Rand, 2010. "Media, Aggregators and the Link Economy: Strategic Hyperlink Formation in Content Networks," Working Papers 10-13, NET Institute.
    14. Sims, Christopher A., 2003. "Implications of rational inattention," Journal of Monetary Economics, Elsevier, vol. 50(3), pages 665-690, April.
    15. Doh-Shin Jeon & Nikrooz Nasr, 2016. "News Aggregators and Competition among Newspapers on the Internet," American Economic Journal: Microeconomics, American Economic Association, vol. 8(4), pages 91-114, November.
    16. Mark Armstrong & John Vickers & Jidong Zhou, 2009. "Prominence and consumer search," RAND Journal of Economics, RAND Corporation, vol. 40(2), pages 209-233, June.
    17. Burguet, Roberto & Caminal, Ramon & Ellman, Matthew, 2015. "In Google we trust?," International Journal of Industrial Organization, Elsevier, vol. 39(C), pages 44-55.
    18. 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.
    19. Germano, Fabrizio & Sobbrio, Francesco, 2020. "Opinion dynamics via search engines (and other algorithmic gatekeepers)," Journal of Public Economics, Elsevier, vol. 187(C).
    20. Glenn Ellison & Sara Fisher Ellison, 2009. "Search, Obfuscation, and Price Elasticities on the Internet," Econometrica, Econometric Society, vol. 77(2), pages 427-452, March.
    21. Francesco Sobbrio, 2014. "The political economy of news media: theory, evidence and open issues," Chapters, in: Francesco Forte & Ram Mudambi & Pietro Maria Navarra (ed.), A Handbook of Alternative Theories of Public Economics, chapter 13, pages 278-320, Edward Elgar Publishing.
    22. Simon P. Anderson & John McLaren, 2012. "Media Mergers And Media Bias With Rational Consumers," Journal of the European Economic Association, European Economic Association, vol. 10(4), pages 831-859, August.
    23. Philip J. Reny, 1999. "On the Existence of Pure and Mixed Strategy Nash Equilibria in Discontinuous Games," Econometrica, Econometric Society, vol. 67(5), pages 1029-1056, September.
    24. Andrei Hagiu & Bruno Jullien, 2011. "Why do intermediaries divert search?," RAND Journal of Economics, RAND Corporation, vol. 42(2), pages 337-362, June.
    25. Petrova, Maria, 2012. "Mass media and special interest groups," Journal of Economic Behavior & Organization, Elsevier, vol. 84(1), pages 17-38.
    26. Lesley Chiou & Catherine Tucker, 2017. "Content aggregation by platforms: The case of the news media," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 26(4), pages 782-805, December.
    27. Schroeder, Elizabeth & Stone, Daniel F., 2015. "Fox News and political knowledge," Journal of Public Economics, Elsevier, vol. 126(C), pages 52-63.
    28. Germano, Fabrizio & Meier, Martin, 2013. "Concentration and self-censorship in commercial media," Journal of Public Economics, Elsevier, vol. 97(C), pages 117-130.
    29. Andrew Rhodes, 2011. "Can Prominence Matter even in an Almost Frictionless Market?," Economic Journal, Royal Economic Society, vol. 121(556), pages 297-308, November.
    30. Sobbrio, Francesco, 2014. "Citizen-editors' endogenous information acquisition and news accuracy," Journal of Public Economics, Elsevier, vol. 113(C), pages 43-53.
    31. White, Alexander, 2013. "Search engines: Left side quality versus right side profits," International Journal of Industrial Organization, Elsevier, vol. 31(6), pages 690-701.
    32. repec:hrv:faseco:33078973 is not listed on IDEAS
    33. Timothy Besley & Andrea Prat, 2006. "Handcuffs for the Grabbing Hand? Media Capture and Government Accountability," American Economic Review, American Economic Association, vol. 96(3), pages 720-736, June.
    34. Greg Taylor, 2013. "Search Quality and Revenue Cannibalization by Competing Search Engines," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 22(3), pages 445-467, September.
    35. Gabriele Gratton & Richard Holden & Anton Kolotilin, 2018. "When to Drop a Bombshell," Review of Economic Studies, Oxford University Press, vol. 85(4), pages 2139-2172.
    36. Jonathan Levin, 2011. "The Economics of Internet Markets," Discussion Papers 10-018, Stanford Institute for Economic Policy Research.
    37. Lisa George & Joel Waldfogel, 2003. "Who Affects Whom in Daily Newspaper Markets?," Journal of Political Economy, University of Chicago Press, vol. 111(4), pages 765-784, August.
    38. Chrysanthos Dellarocas & Zsolt Katona & William Rand, 2013. "Media, Aggregators, and the Link Economy: Strategic Hyperlink Formation in Content Networks," Management Science, INFORMS, vol. 59(10), pages 2360-2379, October.
    39. Timothy Van Zandt, 2004. "Information Overload in a Network of Targeted Communication," RAND Journal of Economics, The RAND Corporation, vol. 35(3), pages 542-560, Autumn.
    40. Susan Athey & Emilio Calvano & Joshua Gans, 2013. "The Impact of the Internet on Advertising Markets for News Media," NBER Working Papers 19419, National Bureau of Economic Research, Inc.
    41. Sendhil Mullainathan & Andrei Shleifer, 2005. "The Market for News," American Economic Review, American Economic Association, vol. 95(4), pages 1031-1053, September.
    42. Hagiu, Andrei & Jullien, Bruno, 2014. "Search diversion and platform competition," International Journal of Industrial Organization, Elsevier, vol. 33(C), pages 48-60.
    43. repec:dgr:kubcen:2013072 is not listed on IDEAS
    44. 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.
    45. Kerkhof, Anna & Münster, Johannes, 2015. "Quantity restrictions on advertising, commercial media bias, and welfare," Journal of Public Economics, Elsevier, vol. 131(C), pages 124-141.
    46. George, Lisa M. & Hogendorn, Christiaan, 2012. "Aggregators, search and the economics of new media institutions," Information Economics and Policy, Elsevier, vol. 24(1), pages 40-51.
    47. Przemyslaw Jeziorski & Ilya Segal, 2015. "What Makes Them Click: Empirical Analysis of Consumer Demand for Search Advertising," American Economic Journal: Microeconomics, American Economic Association, vol. 7(3), pages 24-53, August.
    48. Thomas Eisensee & David Strömberg, 2007. "News Droughts, News Floods, and U. S. Disaster Relief," The Quarterly Journal of Economics, Oxford University Press, vol. 122(2), pages 693-728.
    49. Kenneth C. Wilbur, 2008. "A Two-Sided, Empirical Model of Television Advertising and Viewing Markets," Marketing Science, INFORMS, vol. 27(3), pages 356-378, 05-06.
    50. Susan Athey & Joshua S. Gans, 2010. "The Impact of Targeting Technology on Advertising Markets and Media Competition," American Economic Review, American Economic Association, vol. 100(2), pages 608-613, May.
    51. Lesley Chiou & Catherine Tucker, 2011. "How Does Content Aggregation Affect Users' Search for Information?," Working Papers 11-18, NET Institute, revised Oct 2011.
    52. Jeffrey Ely & Alexander Frankel & Emir Kamenica, 2015. "Suspense and Surprise," Journal of Political Economy, University of Chicago Press, vol. 123(1), pages 215-260.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Burguet, Roberto & Caminal, Ramon & Ellman, Matthew, 2015. "In Google we trust?," International Journal of Industrial Organization, Elsevier, vol. 39(C), pages 44-55.
    2. Germano, Fabrizio & Sobbrio, Francesco, 2020. "Opinion dynamics via search engines (and other algorithmic gatekeepers)," Journal of Public Economics, Elsevier, vol. 187(C).
    3. Kwiek, Maksymilian, 2020. "Communication via intermediaries," Games and Economic Behavior, Elsevier, vol. 121(C), pages 190-203.
    4. de Cornière, Alexandre & Sarvary, Miklos, 2020. "Social Media and the News: Content Bundling and news Quality," TSE Working Papers 20-1152, Toulouse School of Economics (TSE).
    5. Le Moglie, Marco & Turati, Gilberto, 2019. "Electoral cycle bias in the media coverage of corruption news," Journal of Economic Behavior & Organization, Elsevier, vol. 163(C), pages 140-157.
    6. Maria Rosa Battaggion & Alessandro Vaglio, 2020. "TV watching in the new millennium: insights from Europe," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 47(4), pages 645-661, December.
    7. Francesco Sobbrio, 2014. "The political economy of news media: theory, evidence and open issues," Chapters, in: Francesco Forte & Ram Mudambi & Pietro Maria Navarra (ed.), A Handbook of Alternative Theories of Public Economics, chapter 13, pages 278-320, Edward Elgar Publishing.
    8. Schroeder, Elizabeth & Stone, Daniel F., 2015. "Fox News and political knowledge," Journal of Public Economics, Elsevier, vol. 126(C), pages 52-63.
    9. Alexandre de Corniere & Miklos Sarvary, 2017. "Social Media and the News Industry," Working Papers 17-07, NET Institute.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Germano, Fabrizio & Meier, Martin, 2013. "Concentration and self-censorship in commercial media," Journal of Public Economics, Elsevier, vol. 97(C), pages 117-130.
    2. Blasco, Andrea & Sobbrio, Francesco, 2012. "Competition and commercial media bias," Telecommunications Policy, Elsevier, vol. 36(5), pages 434-447.
    3. Andina-Díaz, Ascensión & García-Martínez, José A., 2020. "Reputation and news suppression in the media industry," Games and Economic Behavior, Elsevier, vol. 123(C), pages 240-271.
    4. Piolatto, Amedeo & Schuett, Florian, 2015. "Media competition and electoral politics," Journal of Public Economics, Elsevier, vol. 130(C), pages 80-93.
    5. Peitz, Martin & Reisinger, Markus, 2014. "The Economics of Internet Media," Working Papers 14-23, University of Mannheim, Department of Economics.
    6. Jun Hu, 2021. "User-Generated Content, Social Media Bias and Slant Regulation," Working Papers hal-03120466, HAL.
    7. Maria Battaggion & Alessandro Vaglio, 2015. "Watchdogs, Platforms and Audience: An Economic Perspective on Media Markets," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 43(2), pages 209-228, June.
    8. Germano, Fabrizio & Sobbrio, Francesco, 2020. "Opinion dynamics via search engines (and other algorithmic gatekeepers)," Journal of Public Economics, Elsevier, vol. 187(C).
    9. Garcia Pires, Armando J., 2014. "Media diversity, advertising, and adaptation of news to readers’ political preferences," Information Economics and Policy, Elsevier, vol. 28(C), pages 28-38.
    10. repec:dgr:kubcen:2013072 is not listed on IDEAS
    11. repec:tiu:tiucen:2013072 is not listed on IDEAS
    12. repec:hrv:faseco:33078973 is not listed on IDEAS
    13. Biondo, A.E. & Pluchino, A. & Rapisarda, A., 2018. "Modeling surveys effects in political competitions," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 503(C), pages 714-726.
    14. Francesco Sobbrio, 2012. "A Citizen-Editors Model of News Media," RSCAS Working Papers 2012/61, European University Institute.
    15. Le Moglie, Marco & Turati, Gilberto, 2019. "Electoral cycle bias in the media coverage of corruption news," Journal of Economic Behavior & Organization, Elsevier, vol. 163(C), pages 140-157.
    16. Di Gioacchino, Debora & Verashchagina, Alina, 2020. "Mass media and preferences for redistribution," European Journal of Political Economy, Elsevier, vol. 63(C).
    17. Kerkhof, Anna & Münster, Johannes, 2015. "Quantity restrictions on advertising, commercial media bias, and welfare," Journal of Public Economics, Elsevier, vol. 131(C), pages 124-141.
    18. Friebel, Guido & Heinz, Matthias, 2014. "Media slant against foreign owners: Downsizing," Journal of Public Economics, Elsevier, vol. 120(C), pages 97-106.
    19. David Strömberg, 2015. "Media and Politics," Annual Review of Economics, Annual Reviews, vol. 7(1), pages 173-205, August.
    20. Blasco, Andrea & Pin, Paolo & Sobbrio, Francesco, 2016. "Paying positive to go negative: Advertisers׳ competition and media reports," European Economic Review, Elsevier, vol. 83(C), pages 243-261.
    21. Burguet, Roberto & Caminal, Ramon & Ellman, Matthew, 2015. "In Google we trust?," International Journal of Industrial Organization, Elsevier, vol. 39(C), pages 44-55.
    22. Charles Angelucci & Julia Cagé, 2019. "Newspapers in Times of Low Advertising Revenues," American Economic Journal: Microeconomics, American Economic Association, vol. 11(3), pages 319-364, August.
    23. Serena Marianna Drufuca, 2014. "Information, Media and Elections: Incentives for Media Capture," Working Papers (2013-) 1402, University of Bergamo, Department of Management, Economics and Quantitative Methods.

    More about this item

    Keywords

    news markets; time constrained consumers; digital media; news coverage; public media.;
    All these keywords.

    JEL classification:

    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • H44 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Goods: Mixed Markets
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aim:wpaimx:1552. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Gregory Cornu). General contact details of provider: https://edirc.repec.org/data/amseafr.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.