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Downs meets d’Aspremont and company: Convergence versus differentiation in politics and the media

Wen-Chung Guo, Fu-Chuan Lai and Wing Suen

International Journal of Industrial Organization, 2018, vol. 60, issue C, 96-125

Abstract: Media firms have incentives to differentiate their news products to soften price competition. When consumers value cognitive consistency between the news they read and the policies they support, politicians are induced to propose more polarized policies to conform to a polarized media landscape. A stronger commercial motive or a weaker preference for editorial neutrality in the media exacerbates this effect and causes party policies to become more extreme. We find that prices for news products are higher when consumers have a demand for cognitive consistency, despite the fact that maximal product differentiation does not hold for media firms.

Keywords: Media positions; Political platforms; Polarization; Spatial competition; Cognitive consistency (search for similar items in EconPapers)
JEL-codes: D43 D72 L13 L82 (search for similar items in EconPapers)
Date: 2018
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Handle: RePEc:eee:indorg:v:60:y:2018:i:c:p:96-125