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

  • 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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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
Date of revision:
Handle: RePEc:bol:bodewp:wp772
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  7. Nelson, Philip, 1974. "Advertising as Information," Journal of Political Economy, University of Chicago Press, vol. 82(4), pages 729-54, July/Aug..
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  16. 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, 04.
  17. Marco Gambaro and Riccardo Puglisi, 2010. "What Do Ads Buy? Daily Coverage of Listed Companies on the Italian Press," RSCAS Working Papers 2010/26, European University Institute.
  18. Fabrizio Germano, 2008. "On commercial media bias," Economics Working Papers 1133, Department of Economics and Business, Universitat Pompeu Fabra, revised Apr 2009.
  19. Yongmin Chen & Michael H. Riordan, 2007. "Price and Variety in the Spokes Model," Economic Journal, Royal Economic Society, vol. 117(522), pages 897-921, 07.
  20. 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.
  21. Reuter, Jonathan, 2009. "Does Advertising Bias Product Reviews? An Analysis of Wine Ratings," Journal of Wine Economics, Cambridge University Press, vol. 4(02), pages 125-151, December.
  22. Poitras, Marc & Sutter, Daniel, 2009. "Advertiser pressure and control of the news: The decline of muckraking revisited," Journal of Economic Behavior & Organization, Elsevier, vol. 72(3), pages 944-958, December.
  23. Anthony Downs, 1957. "An Economic Theory of Political Action in a Democracy," Journal of Political Economy, University of Chicago Press, vol. 65, pages 135.
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