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Time scarcity and the market for news

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 and when markets are competitive, 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, as well as a theory of optimal advertisement placement in newscasts. We also analyze methods for restoring reader-efficient standards and discuss the political economy implications of the theory.

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File URL: http://www.econ.upf.edu/docs/papers/downloads/1348.pdf
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Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 1348.

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Date of creation: Dec 2012
Date of revision: Sep 2014
Handle: RePEc:upf:upfgen:1348
Contact details of provider: Web page: http://www.econ.upf.edu/

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  1. Ricardo Reis, 2004. "Inattentive Consumers," NBER Working Papers 10883, National Bureau of Economic Research, Inc.
  2. Fabrizio Germano & Martin Meier, 2011. "Concentration and Self-Censorship in Commercial Media," Working Papers 527, Barcelona Graduate School of Economics.
  3. 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.
  4. Lesley Chiou & Catherine Tucker, 2011. "How Does Content Aggregation Affect Users' Search for Information?," Working Papers 11-18, NET Institute, revised Oct 2011.
  5. Greg Taylor, 2013. "Search Quality and Revenue Cannibalization by Competing Search Engines," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 22(3), pages 445-467, 09.
  6. Anderson, Simon P & de Palma, André, 2009. "Competition for attention in the information (overload) age," CEPR Discussion Papers 7286, C.E.P.R. Discussion Papers.
  7. White, Alexander, 2013. "Search engines: Left side quality versus right side profits," International Journal of Industrial Organization, Elsevier, vol. 31(6), pages 690-701.
  8. Timothy Van Zandt, 2004. "Information Overload in a Network of Targeted Communication," RAND Journal of Economics, The RAND Corporation, vol. 35(3), pages 542-560, Autumn.
  9. Jonathan D. Levin, 2011. "The Economics of Internet Markets," NBER Working Papers 16852, National Bureau of Economic Research, Inc.
  10. Susan Athey & Emilio Calvano & Joshua S. Gans, 2014. "The Impact of the Internet on Advertising Markets for News Media," CSEF Working Papers 379, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
  11. Mark Armstrong & John Vickers & Jidong Zhou, 2009. "Prominence and consumer search," RAND Journal of Economics, RAND Corporation, vol. 40(2), pages 209-233.
  12. Chrysanthos Dellarocas & Zsolt Katona & William Rand, 2010. "Media, Aggregators and the Link Economy: Strategic Hyperlink Formation in Content Networks," Working Papers 10-13, NET Institute.
  13. 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.
  14. Matthew Gentzkow & Jesse M. Shapiro, 2008. "Competition and Truth in the Market for News," Journal of Economic Perspectives, American Economic Association, vol. 22(2), pages 133-154, Spring.
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