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The market for scoops: A dynamic approach

Ascension Andina-Diaz (), José A. García-Martínez () and Antonio Parravano ()
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José A. García-Martínez: Department of Economics, University of Málaga
Antonio Parravano: Department of Economics, University of Málaga

No 2017-03, Working Papers from Universidad de Málaga, Department of Economic Theory, Málaga Economic Theory Research Center

Abstract: We present a dynamic model of competition and reputation in the media industry, in which firms compete for the publication of scoops and both the publication of scoops and their veracity determine a firm's future reputation. We study the dynamics of firms' reputations and how it relates to two issues: The consumers' preferences for information and the dispersion of the firms' editorial standards for quality. We obtain that in the case of a duopoly, there is only one stable steady state. In this equilibrium the two firms coexist and the identity of the firm that leads the market (i.e., whether it is the firm with the high editorial standard or with the low standard) depends on a combination of the two issues above. We then use numerical simulations to analyze the stochastic dynamics for a larger number of firms. We obtain that most of the insights gained for the duopoly case are robust to the consideration of a higher number of firms. We also draw predictions on the number of firms surviving in the long run, showing that the more severe consumers are with the publication of false stories and/or the more similar the firms' standards for quality are, the higher the number of firms in the stationary state.

Keywords: Media industry; Competition; Reputation; Stochastic dynamics; Deterministic dynamics (search for similar items in EconPapers)
JEL-codes: D25 L10 L82 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-cmp, nep-com, nep-cul and nep-mic
Date: 2017-09
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Journal Article: The market for scoops: a dynamic approach (2019) Downloads
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