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Media Bias and Advertising: Evidence from a German Car Magazine

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  • Dewenter Ralf

    (Chair of Industrial Economics, Helmut-Schmidt-University of Hamburg, Holstenhofweg 85, 22043 Hamburg, Germany)

  • Heimeshoff Ulrich

    (DICE, Heinrich-Heine-University of Duesseldorf, Universitaetsstr. 1, 40225 Duesseldorf, Germany)

Abstract

This paper investigates the existence of a possible media bias by analyzing the impact of automobile manufacturers’ advertisements on automobile reviews in a leading German car magazine. By accounting for both endogeneity and sample selection using a two-step procedure, we find a positive impact of advertising volumes on test scores. The main advantage of our study is the measurement of technical characteristics of cars to explain test scores. Due to this kind of measurement, we avoid serious biases in estimating media bias caused by omitted variables.

Suggested Citation

  • Dewenter Ralf & Heimeshoff Ulrich, 2014. "Media Bias and Advertising: Evidence from a German Car Magazine," Review of Economics, De Gruyter, vol. 65(1), pages 77-94, April.
    • Handle: RePEc:lus:reveco:v:65:y:2014:i:1:p:77-94
    DOI: 10.1515/roe-2014-0105
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    6. Reuter, Jonathan, 2009. "Does Advertising Bias Product Reviews? An Analysis of Wine Ratings," Journal of Wine Economics, Cambridge University Press, vol. 4(2), pages 125-151, January.
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    Citations

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    Cited by:

    1. Julia Wolfinger & Lars P. Feld & Ekkehard A. Köhler & Tobias Thomas, 2018. "57 Channels (And Nothin On) - Does TV-News on the Eurozone Affect Government Bond Yield Spreads?," CESifo Working Paper Series 7437, CESifo.
    2. Bernhardt, Lea & Dewenter, Ralf & Thomas, Tobias, 2023. "Measuring partisan media bias in US newscasts from 2001 to 2012," European Journal of Political Economy, Elsevier, vol. 78(C).
    3. Tom Hamami, 2019. "Network Effects, Bargaining Power, and Product Review Bias: Theory and Evidence," Journal of Industrial Economics, Wiley Blackwell, vol. 67(2), pages 372-407, June.
    4. Dewenter, Ralf & Dulleck, Uwe & Thomas, Tobias, 2016. "Does the 4th estate deliver? Towards more direct measure of political media bias," Working Paper 175/2016, Helmut Schmidt University, Hamburg.
    5. Vollaard, Ben & van Ours, Jan C., 2022. "Bias in expert product reviews," Journal of Economic Behavior & Organization, Elsevier, vol. 202(C), pages 105-118.
    6. Diermeier, Matthias & Goecke, Henry & Niehues, Judith & Thomas, Tobias, 2017. "Impact of inequality-related media coverage on the concerns of the citzens," DICE Discussion Papers 258, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    7. Tom Hamami & James Bailey, 2021. "Expert product reviews and conflict of interest," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(1), pages 170-176, January.
    8. Dewenter Ralf & Lüth Hendrik, 2015. "Eine alternative Definition von Suchneutralität / An alternative definition of search neutrality," ORDO. Jahrbuch für die Ordnung von Wirtschaft und Gesellschaft, De Gruyter, vol. 66(1), pages 221-242, January.
    9. Dieter Pennerstorfer & Christoph Weiss & Andreas Huber, 2019. "Experts, Reputation and Umbrella Effects: Empirical Evidence from Wine Prices," Economics working papers 2019-08, Department of Economics, Johannes Kepler University Linz, Austria.
    10. Thomas, Tobias, 2020. "Zur Rolle der Medien in der Demokratie," Research Papers 12, EcoAustria – Institute for Economic Research.
    11. Ralf Dewenter & Uwe Dulleck & Tobias Thomas, 2020. "Does the 4th estate deliver? The Political Coverage Index and its application to media capture," Constitutional Political Economy, Springer, vol. 31(3), pages 292-328, September.
    12. Dewenter, Ralf & Dulleck, Uwe & Thomas, Tobias, 2018. "The political coverage index and its application to government capture," Research Papers 6, EcoAustria – Institute for Economic Research.
    13. Pannicke, Julia, 2015. "Media bias in women's magazines: Do advertisements influence editorial content?," Ilmenau Economics Discussion Papers 99, Ilmenau University of Technology, Institute of Economics.
    14. Bernhardt, Lea & Dewenter, Ralf & Thomas, Tobias, 2020. "Watchdog or loyal servant? Political media bias in US newscasts," DICE Discussion Papers 348, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    15. Hossain, Md Miran & Mammadov, Babak & Vakilzadeh, Hamid, 2024. "Friends in media: Implications of media connections for analyst forecast optimism," International Review of Financial Analysis, Elsevier, vol. 93(C).
    16. Dewenter, Ralf & Linder, Melissa & Thomas, Tobias, 2018. "Can media drive the electorate? The impact of media coverage on party affiliation and voting intentions," Research Papers 7, EcoAustria – Institute for Economic Research.
    17. Hirsch, Patrick & Köhler, Ekkehard A. & Feld, Lars P. & Thomas, Tobias, 2020. ""Whatever it takes!": How tonality of TV-news affects government bond yield spreads during crises," Freiburg Discussion Papers on Constitutional Economics 20/9, Walter Eucken Institut e.V..
    18. Dewenter, Ralf & Linder, Melissa & Thomas, Tobias, 2019. "Can media drive the electorate? The impact of media coverage on voting intentions," European Journal of Political Economy, Elsevier, vol. 58(C), pages 245-261.

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    More about this item

    Keywords

    Car magazines; Media bias; Selection model; Instrumental variable estimation;
    All these keywords.

    JEL classification:

    • L00 - Industrial Organization - - General - - - General
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions

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