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Media Capture and Bias in the Market for News

Author

Listed:
  • Roy Abhra

    (Department of Economics, Finance and Quantitative Analysis, Kennesaw State University, 560 Parliament Garden Way, Kennesaw, GA30144, USA)

Abstract

We analyze a model of media bias under government capture and a free press. The government wants citizens to invest in a project. Citizens gain from investing only if the state of the economy is good. The state is unobserved. The media firm receives a noisy signal about the actual state and makes a report about whether or not the state of the economy is good. Citizens read the report and decide whether or not to invest. In this context, we show that media bias under government capture may be smaller (greater) than that under free press if the cost of investment is sufficiently high (low) provided that the signal noise is below a certain threshold. Finally, we show that the difference between the bias under government capture and free press diverges (converges) when the cost of investment is sufficiently high (low) in response to a reduction in noise.

Suggested Citation

  • Roy Abhra, 2021. "Media Capture and Bias in the Market for News," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 21(3), pages 835-862, July.
    • Handle: RePEc:bpj:bejeap:v:21:y:2021:i:3:p:835-862:n:5
    DOI: 10.1515/bejeap-2020-0226
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    More about this item

    Keywords

    political economy; media bias; media capture; signal quality;
    All these keywords.

    JEL classification:

    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
    • L29 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Other
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption

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