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The Impact of Online Competition on Local Newspapers: Evidence from the Introduction of Craigslist

Author

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  • Djourelova, Milena
  • Durante, Ruben
  • Martin, Gregory J.

Abstract

How does competition from online platforms affect the organization, performance, and editorial choices of newspapers? And what are the implications of these changes for the information voters are exposed to and for their political choices? We study these questions using the staggered introduction of Craigslist - the world’s largest online platform for classified advertising - across US counties between 1995 and 2009. This setting allows us to separate the effect of competition for classified advertising from other changes brought about by the Internet, and to compare newspapers that relied more or less heavily on classified ads ex ante. We find that, following the entry of Craigslist, local papers experienced a significant decline in the number of newsroom and management staff. Cuts in editorial staff disproportionately affected editors covering politics. These organizational changes led to a reduction in news coverage of politics and resulted in a decline in newspaper readership, which was not compensated by increased news consumption online or in other media. Finally, we document that reduced exposure to political news was associated with more partisan voting and increased support for ideologically extreme candidates.

Suggested Citation

  • Djourelova, Milena & Durante, Ruben & Martin, Gregory J., 2021. "The Impact of Online Competition on Local Newspapers: Evidence from the Introduction of Craigslist," CEPR Discussion Papers 16130, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:16130
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    More about this item

    Keywords

    Newspapers; Internet; Advertising; Ideological polarization;
    All these keywords.

    JEL classification:

    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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