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Newspapers and Parties: How Advertising Revenues Created an Independent Press

57 Pages Posted: 3 Apr 2007 Last revised: 17 Aug 2011

Maria Petrova

Institute for Political Economy and Governance, Barcelona; Institució Catalana de Recerca i Estudis Avançats - ICREA; Universitat Pompeu Fabra; Barcelona Graduate School of Economics (Barcelona GSE); New Economic School (NES)

Date Written: August 2011

Abstract

Media freedom strongly inhibits corruption and promotes good governance, but what leads to media freedom? Do economic development and higher advertising revenues tend to make media outlets independent of political groups' influence? Using data on 19th century American newspapers, this paper shows that in places with higher advertising revenues, newspapers were more likely to be independent from political parties. Similar results hold when local advertising rates are instrumented by regulations on outdoor advertising and newspaper distribution. In addition, newly created newspapers were more likely to enter the market as independents in markets with higher advertising rates. The paper also uses the precise timing of major changes in advertising rates, allowing for the possibility of confounding trends, to identify the effect of advertising on entries of new newspapers. Finally, it shows that economic development is not the only cause of the growth of an independent press, as political factors also played a role.

Keywords: mass media, advertising, political parties, independent press

JEL Classification: C72, D72, N21, N71

Suggested Citation

Petrova, Maria, Newspapers and Parties: How Advertising Revenues Created an Independent Press (August 2011). Available at SSRN: https://ssrn.com/abstract=977285 or http://dx.doi.org/10.2139/ssrn.977285

Maria Petrova (Contact Author)

New Economic School (NES) ( email )

47 Nakhimovsky Prospekt
Moscow, 117418
Russia

Institute for Political Economy and Governance, Barcelona ( email )

Ramon Trias Fargas, 25-27
Barcelona, 08005
Spain

Institució Catalana de Recerca i Estudis Avançats - ICREA ( email )

Passeig Lluís Companys, 23
Barcelona, 08010
Spain

Universitat Pompeu Fabra ( email )

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

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

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

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