Media versus Special Interests
I. J. Alexander Dyck
University of Toronto - Rotman School of Management
David A. Moss
Harvard Business School - Business, Government and the International Economy Unit
University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR); University of Chicago - Polsky Center for Entrepreneurship; European Corporate Governance Institute (ECGI)
CEPR Discussion Paper No. DP6994
We argue that profit-maximizing media help overcome the problem of "rational ignorance" highlighted by Downs (1957) and in so doing make elected representatives more sensitive to the interests of general voters. By collecting news and combining it with entertainment, media are able to inform passive voters on politically relevant issues. To show the impact this information has on legislative outcomes, we document the effect "muckraking" magazines had on the voting patterns of U.S. representatives and senators in the early part of the 20th century. We also show under what conditions profit-maximizing media will cater to general (less affluent) voters in their coverage, providing a counterbalance to special interests.
Number of Pages in PDF File: 50
Keywords: media, muckraking, regulation
JEL Classification: L51, N41, P16working papers series
Date posted: December 2, 2008
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