The Media and an Informed Electorate - An Economist's Perspective

ANZCA08 Refereed Proceedings

24 Pages Posted: 8 Jul 2008 Last revised: 15 Jun 2009

See all articles by K. Stuart Birks

K. Stuart Birks

Massey University - Massey Business School

Date Written: July 9, 2008

Abstract

The media make an important contribution to the public's understanding of policy issues. They are therefore important contributors to the workings of a democracy.

Economic theory provides powerful tools for analysing markets. These include specification of a theoretical 'ideal' market and identification of possible market distortions or 'failures'. This theory also provides frameworks for understanding possible policy interventions to address these failures, including explanations of their effects.

This paper presents a theoretical economic structure for news media markets as providers of information on policy issues. Conceptually, it could be imagined that there are markets operating for the purchase and sale of information through newspapers, television and radio. Sufficient conditions are suggested for such markets to work in an ideal manner. This is contrasted to actual news media markets, identifying six possible market failures and associated policy interventions (including public provision). In part, this discussion may help to explain current policies on the news media, both in terms of why they have been introduced and how they may work. In addition, they may indicate the thinking underpinning the decisions to introduce the policies, why those interventions were selected. If the theory is relevant, this gives a useful structure for understanding and influencing the news media. If the theory is not relevant due to misrepresenting the actual operation of the news media, others may be able to see flaws in the reasoning. Economists could then take note of these errors to improve their understanding and resulting policy recommendations.

Keywords: news media markets, market failure, information

JEL Classification: D43, D83, L82

Suggested Citation

Birks, K. Stuart, The Media and an Informed Electorate - An Economist's Perspective (July 9, 2008). ANZCA08 Refereed Proceedings, Available at SSRN: https://ssrn.com/abstract=1156121 or http://dx.doi.org/10.2139/ssrn.1156121

K. Stuart Birks (Contact Author)

Massey University - Massey Business School ( email )

New Zealand

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