Competition and Ideological Diversity: Historical Evidence from Us Newspapers

47 Pages Posted: 21 Jul 2012 Last revised: 22 Jul 2012

See all articles by Matthew Gentzkow

Matthew Gentzkow

University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)

Jesse M. Shapiro

Brown University - Department of Economics; National Bureau of Economic Research (NBER)

Michael Sinkinson

Yale SOM

Multiple version iconThere are 2 versions of this paper

Date Written: July 2012

Abstract

We study the competitive forces that shaped ideological diversity in the US press in the early twentieth century. We find that households preferred like-minded news and that newspapers used their political orientation to differentiate from competitors. We formulate a model of newspaper demand, entry, and political affiliation choice in which newspapers compete for both readers and advertisers. We use a combination of estimation and calibration to identify the model's parameters from novel data on newspaper circulation, costs, and revenues. The estimated model implies that competition enhances ideological diversity, that the market undersupplies diversity, and that optimal competition policy requires accounting for the two-sidedness of the news market.

Suggested Citation

Gentzkow, Matthew Aaron and Shapiro, Jesse M. and Sinkinson, Michael, Competition and Ideological Diversity: Historical Evidence from Us Newspapers (July 2012). NBER Working Paper No. w18234. Available at SSRN: https://ssrn.com/abstract=2114860

Matthew Aaron Gentzkow (Contact Author)

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Jesse M. Shapiro

Brown University - Department of Economics ( email )

64 Waterman Street
Providence, RI 02912
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Michael Sinkinson

Yale SOM ( email )

127 Wall Street
New Haven, CT 06511
United States

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