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The Market for News: A Demand-Oriented Analysis

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  • Maria Rosa Battaggion
  • Alessandro Vaglio

Abstract

In this paper we investigate two elements of news demand behavior: the choice between gathering information through the news market and making one's decisions on the basis of prior beliefs; the choice between consulting more than one source and relying on just one. We single out education as the main determinant of behavior, by assuming that education is inversely related to (time) opportunity cost that the individual bears when he gets informed. In our model, two sources of information compete for an audience composed by rational individuals, assumed to be heterogeneous regarding their education level. We show that two market configurations may emerge. In the first one, individuals split into two groups, one composed by those who do not demand news at all, and another one composed by individuals who consult both sources. In the second configuration, individuals split into a group of non-readers, a group of one-report readers and a group of two-report readers. The former configuration is associated to high costs of news production and high opportunity costs. One of the sources in the latter configuration provides higher quality news than any of the two sources in the former, and it may also result in a larger number of news-demanding individuals.

Suggested Citation

  • Maria Rosa Battaggion & Alessandro Vaglio, 2012. "The Market for News: A Demand-Oriented Analysis," Economia politica, Società editrice il Mulino, issue 1, pages 81-110.
    • Handle: RePEc:mul:jb33yl:doi:10.1428/36747:y:2012:i:1:p:81-110
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    Cited by:

    1. Maria Rosa Battaggion & Alessandro Vaglio, 2020. "TV watching in the new millennium: insights from Europe," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 47(4), pages 645-661, December.
    2. Armando J. Garcia Pires, 2017. "Media pluralism and competition," European Journal of Law and Economics, Springer, vol. 43(2), pages 255-283, April.
    3. Maria Battaggion & Alessandro Vaglio, 2015. "Watchdogs, Platforms and Audience: An Economic Perspective on Media Markets," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 43(2), pages 209-228, June.
    4. Maria Rosa Battaggion & Alessandro Vaglio, 2018. "Newspapers and public grants: A matter of quality," Scottish Journal of Political Economy, Scottish Economic Society, vol. 65(1), pages 27-38, February.
    5. Serena Marianna Drufuca, 2014. "Information, Media and Elections: Incentives for Media Capture," Working Papers (2013-) 1402, University of Bergamo, Department of Management, Economics and Quantitative Methods.

    More about this item

    Keywords

    J.E.L.: L82; D83; Z1;
    All these keywords.

    JEL classification:

    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • Z1 - Other Special Topics - - Cultural Economics

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