Paper #800

Title:

What do the papers sell?

Authors:

Matthew Ellman and Fabrizio Germano

Date:

December 2004 (Revised: February 2006)

Abstract:

We model the market for news as a two-sided market where newspapers sell news to readers who value accuracy and sell space to advertisers who value advert-receptive readers. We show that monopolistic newspapers under-report or bias news that sufficiently reduces advertiser profits. Newspaper competition generally reduces the impact of advertising. In fact, as the size of advertising grows, newspapers may paradoxically reduce advertiser bias, due to increasing competition for readers. However, advertisers can counter this effect of competition by committing to news-sensitive cut-off strategies, potentially inducing as much under-reporting as in the monopoly case.

Keywords:

Two-sided markets, advertising, media accuracy, media bias, media economics.

JEL codes:

L13, L82

Area of Research:

Management and Organization Studies

Published in:

Economic Journal, 119, 537, pp. 680-704. 2009
With the title:
What do the papers sell? A model of advertising and media bias

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