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A Case for Competition in Information Provision

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  • Bianca Sanesi
  • Federico Vaccari

Abstract

We study how competition among biased news sources affects information and welfare when sources can misrepresent facts at a cost. Monopolistic and competitive market structures admit many equilibria. We develop a common belief-based selection criterion that applies to both and makes welfare comparisons possible. Under the refined outcomes, adding an oppositely biased source improves the receiver's welfare when that source faces sufficiently high misreporting costs. Competition disciplines the incumbent while introducing a few distortions of its own. Better information need not increase total welfare, and distorted advice from a monopolist can raise total welfare. Competition may improve decision-making without being socially beneficial.

Suggested Citation

  • Bianca Sanesi & Federico Vaccari, 2026. "A Case for Competition in Information Provision," Papers 2608.24129, arXiv.org.
    • Handle: RePEc:arx:papers:2608.24129
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    References listed on IDEAS

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    1. J. Duggan & C. Martinelli, 2011. "A Spatial Theory of Media Slant and Voter Choice," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 78(2), pages 640-666.
    2. Junichiro Ishida & Takashi Shimizu, 2019. "Cheap talk when the receiver has uncertain information sources," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 68(2), pages 303-334, September.
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