Paying Positive to Go Negative: Advertisers' Competition and Media Reports. Extended Version

46 Pages Posted: 1 Feb 2014

See all articles by Andrea Blasco

Andrea Blasco

Harvard University - Institute for Quantitative Social Science

Paolo Pin

Dipartimento di Economia Politica, Università degli Studi di Siena

Francesco Sobbrio

University of Rome Tor Vergata - Department of Economics and Finance; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: March 1, 2012

Abstract

This paper analyzes a two-sided market for news where advertisers may pay a media outlet to conceal negative information about the quality of their own product (paying positive to avoid negative) and/or to disclose negative information about the quality of their competitors' products (paying positive to go negative). We show that whether or not advertisers have negative consequences on the accuracy of news reports ultimately depends on the extent of correlation among advertisers' products. Specifically, the lower is the correlation among the qualities of the advertisers' products, the (weakly) higher is the accuracy of the media outlet' reports. Moreover, when advertisers' products are correlated, a higher degree of competition in the market of the advertisers' products may decrease the accuracy of the media outlet's reports.

Keywords: Advertising, Commercial Media Bias, Competition, Media accuracy, Two-sided market

JEL Classification: L82, D82

Suggested Citation

Blasco, Andrea and Pin, Paolo and Sobbrio, Francesco, Paying Positive to Go Negative: Advertisers' Competition and Media Reports. Extended Version (March 1, 2012). Available at SSRN: https://ssrn.com/abstract=2388196 or http://dx.doi.org/10.2139/ssrn.2388196

Andrea Blasco

Harvard University - Institute for Quantitative Social Science ( email )

1737 Cambridge St.
Cambridge, MA 02138
United States

Paolo Pin

Dipartimento di Economia Politica, Università degli Studi di Siena ( email )

Piazza San Francesco 8
Siena, I53100
Italy

HOME PAGE: http://www.econ-pol.unisi.it/paolopin/

Francesco Sobbrio (Contact Author)

University of Rome Tor Vergata - Department of Economics and Finance ( email )

Via columbia 2
Rome, Rome 00123
Italy

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

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