What Do the Papers Sell?

UPF Economics and Business Working Paper No. 800

41 Pages Posted: 16 Nov 2005

See all articles by Matthew Ellman

Matthew Ellman

Institut d'Anàlisi Econòmica (CSIC); Barcelona Graduate School of Economics (Barcelona GSE)

Fabrizio Germano

Universitat Pompeu Fabra - Department of Economics and Business

Date Written: May 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 Classification: L13, L82

Suggested Citation

Ellman, Matthew and Germano, Fabrizio, What Do the Papers Sell? (May 2006). UPF Economics and Business Working Paper No. 800, Available at SSRN: https://ssrn.com/abstract=849325 or http://dx.doi.org/10.2139/ssrn.849325

Matthew Ellman (Contact Author)

Institut d'Anàlisi Econòmica (CSIC) ( email )

UAB Campus
IAE-CSIC
E-08193 Bellaterra, Barcelona 08193
Spain
0034935806612 (Phone)

Barcelona Graduate School of Economics (Barcelona GSE) ( email )

Ramon Trias Fargas, 25-27
Barcelona, Barcelona 08005
Spain

Fabrizio Germano

Universitat Pompeu Fabra - Department of Economics and Business ( email )

Ramon Trias Fargas 25-27
Barcelona, 08005
Spain
+34-93-542-2729 (Phone)
+34-93-542-1746 (Fax)

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