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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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File URL: http://www2.dse.unibo.it/wp/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
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Handle: RePEc:bol:bodewp:wp772
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  1. Fabrizio Germano & Martin Meier, 2010. "Concentration and self-censorship in commercial media," Economics Working Papers 1256, Department of Economics and Business, Universitat Pompeu Fabra.
  2. 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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  7. Bergemann, Dirk & Bonatti, Alessandro, 2010. "Targeting in Advertising Markets: Implications for Offline vs. Online Media," CEPR Discussion Papers 7988, C.E.P.R. Discussion Papers.
  8. Anthony Dukes, 2004. "The Adverstising Market in a Product Oligopoly," Journal of Industrial Economics, Wiley Blackwell, vol. 52(3), pages 327-348, 09.
  9. Blasco, Andrea & Sobbrio, Francesco, 2012. "Competition and commercial media bias," Telecommunications Policy, Elsevier, vol. 36(5), pages 434-447.
  10. Nelson, Philip, 1974. "Advertising as Information," Journal of Political Economy, University of Chicago Press, vol. 82(4), pages 729-54, July/Aug..
  11. 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 317-34.
  12. Jonathan Reuter & Eric Zitzewitz, 2005. "Do Ads Influence Editors? Advertising and Bias in the Financial Media," Finance 0501003, EconWPA.
  13. 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.
  14. 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.
  15. Rafael Di Tella & Ignacio Franceschelli, 2009. "Government Advertising and Media Coverage of Corruption Scandals," NBER Working Papers 15402, National Bureau of Economic Research, Inc.
  16. GABSZEWICZ, Jean J. & LAUSSEL, Didier & SONNAC, Nathalie, . "Press advertising and the ascent of the `Pensée Unique'," CORE Discussion Papers RP -1512, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  17. 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.
  18. 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.
  19. Maria Petrova, 2010. "Mass Media and Special Interest Groups," Working Papers w0144, Center for Economic and Financial Research (CEFIR).
  20. 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.
  21. Fabrizio Germano, 2008. "On commercial media bias," Economics Working Papers 1133, Department of Economics and Business, Universitat Pompeu Fabra, revised Apr 2009.
  22. 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, 01.
  23. 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.
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