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Time Scarcity and the Market for News


  • Larbi Alaoui
  • Fabrizio Germano


We develop a theory of news coverage in environments of information abundance. News consumers are time-constrained and browse through news items that are available across competing outlets, choosing which ones 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, even when readers and outlets are rational and unbiased and when markets are competitive, readers may read more than they would like to, and the stories they read may be significantly different from the ones they prefer. Next, we derive implications on diverse aspects of new and traditional media. These include a rationale for tabloid news, a theory of optimal advertisement placement in newscasts, and a justification for readers' migration to online media platforms in order to circumvent inefficient rankings found in traditional media. We then analyze methods for restoring reader-efficient standards and discuss the political economy implications of the theory.

Suggested Citation

  • Larbi Alaoui & Fabrizio Germano, 2014. "Time Scarcity and the Market for News," Working Papers 675, Barcelona Graduate School of Economics.
  • Handle: RePEc:bge:wpaper:675

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    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. Fabrizio Germano & Francesco Sobbrio, 2016. "Opinion dynamics via search engines (and other algorithmic gatekeepers)," Economics Working Papers 1552, Department of Economics and Business, Universitat Pompeu Fabra, revised Apr 2017.
    3. Alexandre de Corniere & Miklos Sarvary, 2017. "Social Media and the News Industry," Working Papers 17-07, NET Institute.
    4. Schroeder, Elizabeth & Stone, Daniel F., 2015. "Fox News and political knowledge," Journal of Public Economics, Elsevier, vol. 126(C), pages 52-63.

    More about this item


    media competition; news ranking; political economy; scarcity of time;

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media

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