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Understanding the Internet's Relevance to Media Ownership Policy: A Model of Too Many Choices

Matthew Nagler ()

The B.E. Journal of Economic Analysis & Policy, 2007, vol. 7, issue 1, 1-28

Abstract: Does the Internet provide a failsafe against media consolidation in the wake of an easing of media ownership rules? This paper posits a model of news outlet selection on the Internet in which consumers experience cognitive costs that increase with the number of options faced. Consistent with psychological evidence, these costs may be reduced by constraining one's choice set to "safe bets" familiar from offline (e.g., CNN.com). It is shown that, as the number of outlets grows, dispersion of patronage across outlets inevitably declines. Consequently, independent Internet outlets may fail to mitigate lost outlet independence on other media.

Date: 2007
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DOI: 10.2202/1935-1682.1663

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