Paying positive to go negative: Advertisers׳ competition and media reports

Andrea Blasco, Paolo Pin and Francesco Sobbrio

European Economic Review, 2016, vol. 83, issue C, 243-261

Abstract: This paper analyzes a two-sided market for news where two rival 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 competitor׳s product (paying positive to go negative). We show that competition in the product market does not necessarily prevent the emergence of commercial media bias. Whether or not competing advertisers end up having negative consequences on news accuracy ultimately depends on the extent of correlation in the quality of their products; the lower the correlation, the higher the expected accuracy of the media outlet׳s reports. These findings provide a rationale to explain the observed differences in the extent of commercial media bias across seemingly similar industries or products, within the same media market. The results are robust to the presence of multiple media outlets and to asymmetries between the advertisers. Overall, the paper provides theoretical insights for media regulators and for the empirical literature examining the link between advertising and news contents.

Keywords: Advertising; Commercial Media Bias; Competition; Media accuracy; Two-sided market (search for similar items in EconPapers)
JEL-codes: D82 L82 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0014292116300058
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Paying Positive to Go Negative: Advertisers' Competition and Media Reports (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:83:y:2016:i:c:p:243-261

DOI: 10.1016/j.euroecorev.2016.01.005

Access Statistics for this article

European Economic Review is currently edited by T.S. Eicher, A. Imrohoroglu, E. Leeper, J. Oechssler and M. Pesendorfer

More articles in European Economic Review from Elsevier
Bibliographic data for series maintained by Catherine Liu ().