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Time Scarcity and the Market for News

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  • Larbi Alaoui

    (UPF - Universitat Pompeu Fabra [Barcelona])

  • Fabrizio Germano

    (UPF - Universitat Pompeu Fabra [Barcelona])

Abstract

We develop a theory of news coverage in environments of information abundance that include both new and traditional news media, from online and print newspapers to radio and television. News consumers are time-constrained and browse through news items that are available across competing outlets, choosing which outlets to access and which stories 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 the news consumed in equilibrium is highly sensitive to the details of the environment. We show that even when readers and outlets are rational and unbiased, readers may consume more than they would like to, and the news items they consume may be significantly different from the ones they prefer. Important news items may be crowded out. Next, we derive implications on diverse aspects of current media, including a rationale for tabloid news, a rationale for why readers prefer like-minded news, and how advertising can contribute to crowding out news. We also analyze methods for restoring reader-efficient standards and discuss the political economy implications of the theory.

Suggested Citation

  • Larbi Alaoui & Fabrizio Germano, 2015. "Time Scarcity and the Market for News," Working Papers halshs-01251522, HAL.
  • Handle: RePEc:hal:wpaper:halshs-01251522
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-01251522
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    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. de Cornière, Alexandre & Sarvary, Miklos, 2020. "Social Media and News: Content Bundling and news Quality," TSE Working Papers 20-1152, Toulouse School of Economics (TSE).
    2. Burguet, Roberto & Caminal, Ramon & Ellman, Matthew, 2015. "In Google we trust?," International Journal of Industrial Organization, Elsevier, vol. 39(C), pages 44-55.
    3. Lisa M. George & Christiaan Hogendorn, 2020. "Local News Online: Aggregators, Geo‐Targeting and the Market for Local News," Journal of Industrial Economics, Wiley Blackwell, vol. 68(4), pages 780-818, December.
    4. Maria Rosa Battaggion & Alessandro Vaglio, 2020. "TV watching in the new millennium: insights from Europe," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 47(4), pages 645-661, December.
    5. Kwiek, Maksymilian, 2020. "Communication via intermediaries," Games and Economic Behavior, Elsevier, vol. 121(C), pages 190-203.
    6. Le Moglie, Marco & Turati, Gilberto, 2019. "Electoral cycle bias in the media coverage of corruption news," Journal of Economic Behavior & Organization, Elsevier, vol. 163(C), pages 140-157.
    7. Germano, Fabrizio & Sobbrio, Francesco, 2020. "Opinion dynamics via search engines (and other algorithmic gatekeepers)," Journal of Public Economics, Elsevier, vol. 187(C).
    8. Alexandre de Cornière & Miklos Sarvary, 2023. "Social Media and News: Content Bundling and News Quality," Management Science, INFORMS, vol. 69(1), pages 162-178, January.
    9. Francesco Sobbrio, 2014. "The political economy of news media: theory, evidence and open issues," Chapters, in: Francesco Forte & Ram Mudambi & Pietro Maria Navarra (ed.), A Handbook of Alternative Theories of Public Economics, chapter 13, pages 278-320, Edward Elgar Publishing.
    10. Alexandre de Corniere & Miklos Sarvary, 2017. "Social Media and the News Industry," Working Papers 17-07, NET Institute.
    11. Schroeder, Elizabeth & Stone, Daniel F., 2015. "Fox News and political knowledge," Journal of Public Economics, Elsevier, vol. 126(C), pages 52-63.

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    More about this item

    Keywords

    news markets; time constrained consumers; digital media; news coverage; public media;
    All these keywords.

    JEL classification:

    • H44 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Goods: Mixed Markets
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

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