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Time scarcity and the market for news

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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 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.

Suggested Citation

  • Larbi Alaoui & Fabrizio Germano, 2012. "Time scarcity and the market for news," Economics Working Papers 1348, Department of Economics and Business, Universitat Pompeu Fabra, revised Sep 2014.
  • Handle: RePEc:upf:upfgen:1348
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    References listed on IDEAS

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    Cited by:

    1. Burguet, Roberto & Caminal, Ramon & Ellman, Matthew, 2015. "In Google we trust?," International Journal of Industrial Organization, Elsevier, vol. 39(C), pages 44-55.
    2. Fabrizio Germano & Francesco Sobbrio, 2016. "Opinion dynamics via search engines (and other algorithmic gatekeepers)," Economics Working Papers 1552, Department of Economics and Business, Universitat Pompeu Fabra, revised Mar 2018.
    3. Alexandre de Corniere & Miklos Sarvary, 2017. "Social Media and the News Industry," Working Papers 17-07, NET Institute.
    4. Marco Le Moglie & Gilberto Turati, 2018. "Electoral Cycle Bias in the Media Coverage of Corruption News," DISCE - Working Papers del Dipartimento di Economia e Finanza def069, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    5. Schroeder, Elizabeth & Stone, Daniel F., 2015. "Fox News and political knowledge," Journal of Public Economics, Elsevier, vol. 126(C), pages 52-63.

    More about this item

    Keywords

    News markets; news coverage; time constrained consumers; media competition; digital media.;

    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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