Does New Information Technology Lower Media Quality? The Paradox of Commercial Public Goods

Man-Lui Lau and Bruce Wydick

Journal of Industry, Competition and Trade, 2014, vol. 14, issue 2, 145-157

Abstract: We define commercial public goods as goods that are broadcast via television, radio, newsprint, or websites for which consumption is non-rival and non-exclusive, and revenue is generated mainly through advertising alongside a product in a two-sided market. With new information technology the fixed cost of entry in these markets has substantially declined. We demonstrate that as fixed costs of entry decline in a competitive media market, lower industry concentration results in lower resources to each firm for the production of commercial public goods. The counterintuitive result of new information technology is that it may result in lower quality news reporting and a less-informed population. The result may hold even when consumers exhibit preferences for diversity in media outlets. Copyright Springer Science+Business Media New York 2014

Keywords: Commercial public goods; New media; Information technology; L10; L15; L82; O30 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (2)

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DOI: 10.1007/s10842-013-0157-x

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