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We model the market for news as a two-sided market where newspapers sell news to readers who value accuracy, and sell space to advertisers who value advert-receptive readers. We show that a monopoly newspaper under-reports or biases news that sufficiently reduces advertiser profits, whereas in the duopoly case, newspapers may paradoxically increase accuracy as the size of advertisers grows. We then show how advertisers can thwart this competitive effect on newspaper accuracy by committing to certain cut-off strategies, potentially inducing the same level of under-reporting as in the monopoly case.
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- Peter M. Demarzo & Dimitri Vayanos & Jeffrey Zwiebel, 2003.
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- Simon P. Anderson & Stephen Coate, 2003. "Market Provision of Broadcasting: A Welfare Analysis," Virginia Economics Online Papers 358, University of Virginia, Department of Economics.
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