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Paying Positive to Go Negative: Advertisers' Competition and Media Reports

Listed author(s):
  • A. Blasco
  • P. Pin
  • F. Sobbrio

This paper analyzes a two-sided market for news where advertisers may pay a media outlet to conceal negative information about the quality of their own product (paying positive to avoid negative) and/or to disclose negative information about the quality of their competitors' products (paying positive to go negative). We show that whether advertisers have negative consequences on the accuracy of news reports or not ultimately depends on the extent of correlation among advertisers' products. Specifically, the lower the correlation among the qualities of the advertisers' products, the (weakly) higher the accuracy of the media outlet' reports. Moreover, when advertisers' products are correlated, a higher degree of competition in the market of the advertisers' products may decrease the accuracy of the media outlet's reports.

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File URL: http://amsacta.unibo.it/4467/1/WP772.pdf
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Paper provided by Dipartimento Scienze Economiche, Universita' di Bologna in its series Working Papers with number wp772.

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Date of creation: Jul 2011
Handle: RePEc:bol:bodewp:wp772
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