IDEAS home Printed from https://ideas.repec.org/p/bol/bodewp/wp772.html
   My bibliography  Save this paper

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

Author

Listed:
  • A. Blasco
  • P. Pin
  • F. Sobbrio

Abstract

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.

Suggested Citation

  • A. Blasco & P. Pin & F. Sobbrio, 2011. "Paying Positive to Go Negative: Advertisers' Competition and Media Reports," Working Papers wp772, Dipartimento Scienze Economiche, Universita' di Bologna.
  • Handle: RePEc:bol:bodewp:wp772
    as

    Download full text from publisher

    File URL: http://amsacta.unibo.it/4467/1/WP772.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Yongmin Chen & Michael H. Riordan, 2007. "Price and Variety in the Spokes Model," Economic Journal, Royal Economic Society, vol. 117(522), pages 897-921, July.
    2. Matthew Gentzkow & Edward L. Glaeser & Claudia Goldin, 2006. "The Rise of the Fourth Estate. How Newspapers Became Informative and Why It Mattered," NBER Chapters,in: Corruption and Reform: Lessons from America's Economic History, pages 187-230 National Bureau of Economic Research, Inc.
    3. Dirk Bergemann & Alessandro Bonatti, 2010. "Targeting in Advertising Markets: Implications for Offline vs. Online Media," Cowles Foundation Discussion Papers 1758, Cowles Foundation for Research in Economics, Yale University.
    4. Anthony Dukes, 2004. "The Adverstising Market in a Product Oligopoly," Journal of Industrial Economics, Wiley Blackwell, vol. 52(3), pages 327-348, September.
    5. Johan F. M. Swinnen & Jill McCluskey & Nathalie Francken, 2005. "Food safety, the media, and the information market," Agricultural Economics, International Association of Agricultural Economists, vol. 32(s1), pages 175-188, January.
    6. Gabszewicz, Jean J. & Laussel, Dider & Sonnac, Nathalie, 2001. "Press advertising and the ascent of the 'Pensee Unique'," European Economic Review, Elsevier, vol. 45(4-6), pages 641-651, May.
    7. Palfrey, Thomas R. & Rosenthal, Howard, 1984. "Participation and the provision of discrete public goods: a strategic analysis," Journal of Public Economics, Elsevier, vol. 24(2), pages 171-193, July.
    8. repec:cup:apsrev:v:105:y:2011:i:04:p:790-808_00 is not listed on IDEAS
    9. Blasco, Andrea & Sobbrio, Francesco, 2012. "Competition and commercial media bias," Telecommunications Policy, Elsevier, vol. 36(5), pages 434-447.
    10. Rafael Di Tella & Ignacio Franceschelli, 2011. "Government Advertising and Media Coverage of Corruption Scandals," American Economic Journal: Applied Economics, American Economic Association, vol. 3(4), pages 119-151, October.
    11. De Smet, Dries & Vanormelingen, Stijn, 2012. "The Advertiser is Mentioned Twice. Media Bias in Belgian Newspapers," Working Papers 2012/05, Hogeschool-Universiteit Brussel, Faculteit Economie en Management.
    12. Gambaro, Marco & Puglisi, Riccardo, 2015. "What do ads buy? Daily coverage of listed companies on the Italian press," European Journal of Political Economy, Elsevier, vol. 39(C), pages 41-57.
    13. Anthony Downs, 1957. "An Economic Theory of Political Action in a Democracy," Journal of Political Economy, University of Chicago Press, vol. 65, pages 135-135.
    14. Mark Armstrong, 2006. "Competition in two‐sided markets," RAND Journal of Economics, RAND Corporation, vol. 37(3), pages 668-691, September.
    15. 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.
    16. Petrova, Maria, 2011. "Newspapers and Parties: How Advertising Revenues Created an Independent Press," American Political Science Review, Cambridge University Press, vol. 105(04), pages 790-808, November.
    17. Germano, Fabrizio & Meier, Martin, 2013. "Concentration and self-censorship in commercial media," Journal of Public Economics, Elsevier, vol. 97(C), pages 117-130.
    18. Gabszewicz, Jean J & Laussel, Didier & Sonnac, Nathalie, 2002. " Press Advertising and the Political Differentiation of Newspapers," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 4(3), pages 317-334.
    19. Baye, Michael R. & Morgan, John, 1999. "A folk theorem for one-shot Bertrand games," Economics Letters, Elsevier, vol. 65(1), pages 59-65, October.
    20. Timothy Besley & Andrea Prat, 2006. "Handcuffs for the Grabbing Hand? Media Capture and Government Accountability," American Economic Review, American Economic Association, vol. 96(3), pages 720-736, June.
    21. 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.
    22. Petrova, Maria, 2012. "Mass media and special interest groups," Journal of Economic Behavior & Organization, Elsevier, vol. 84(1), pages 17-38.
    23. Jonathan Reuter & Eric Zitzewitz, 2006. "Do Ads Influence Editors? Advertising and Bias in the Financial Media," The Quarterly Journal of Economics, Oxford University Press, vol. 121(1), pages 197-227.
    24. Chaloupka, Frank J. & Warner, Kenneth E., 2000. "The economics of smoking," Handbook of Health Economics,in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 29, pages 1539-1627 Elsevier.
    25. Marco GAMBARO & Riccardo PUGLISI, 2009. "What do ads buy? Daily coverage of listed companies on the Italian press," Departmental Working Papers 2009-36, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    26. 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, April.
    27. Fabrizio Germano, 2008. "On commercial media bias," Economics Working Papers 1133, Department of Economics and Business, Universitat Pompeu Fabra, revised Apr 2009.
    28. Nelson, Philip, 1974. "Advertising as Information," Journal of Political Economy, University of Chicago Press, vol. 82(4), pages 729-754, July/Aug..
    29. Arye Hillman & Dov Samet, 1987. "Dissipation of contestable rents by small numbers of contenders," Public Choice, Springer, vol. 54(1), pages 63-82, January.
    30. 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.
    31. Guillaume Roger, 2010. "Two-Sided Competition and Differentiation (with an Application to Media)," Discussion Papers 2010-27, School of Economics, The University of New South Wales.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Dewenter, Ralf & Heimeshoff, Ulrich, 2015. "More ads more revs: A note on media bias in review likelihood," Economic Modelling, Elsevier, vol. 44(C), pages 156-161.
    2. repec:eee:phsmap:v:503:y:2018:i:c:p:714-726 is not listed on IDEAS
    3. Blasco, Andrea & Sobbrio, Francesco, 2012. "Competition and commercial media bias," Telecommunications Policy, Elsevier, vol. 36(5), pages 434-447.
    4. Germano, Fabrizio & Meier, Martin, 2013. "Concentration and self-censorship in commercial media," Journal of Public Economics, Elsevier, vol. 97(C), pages 117-130.
    5. Federico Etro, 2012. "Leadership in Multi-sided Markets and Dominance in Online Advertising," Chapters,in: Recent Advances in the Analysis of Competition Policy and Regulation, chapter 11 Edward Elgar Publishing.
    6. Tom Hamami, 2016. "Network Effects, Bargaining Power, and Product Review Bias: Theory and Evidence," 2016 Papers pha1136, Job Market Papers.
    7. Rafael Di Tella & Ignacio Franceschelli, 2011. "Government Advertising and Media Coverage of Corruption Scandals," American Economic Journal: Applied Economics, American Economic Association, vol. 3(4), pages 119-151, October.
    8. Francesco Sobbrio, 2012. "A Citizen-Editors Model of News Media," RSCAS Working Papers 2012/61, European University Institute.
    9. Francesco Sobbrio, 2014. "The political economy of news media: theory, evidence and open issues," Chapters,in: A Handbook of Alternative Theories of Public Economics, chapter 13, pages 278-320 Edward Elgar Publishing.
    10. Ruenzi, Stefan & Focke, Florens & Niessen-Ruenzi, Alexandra, 2014. "A Friendly Turn: Advertising Bias in the News Media," Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100497, Verein für Socialpolitik / German Economic Association.

    More about this item

    JEL classification:

    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bol:bodewp:wp772. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dipartimento Scienze Economiche, Universita' di Bologna). General contact details of provider: http://edirc.repec.org/data/sebolit.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.