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Advertising Spending and Media Bias: Evidence from News Coverage of Car Safety Recalls

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Listed:
  • Graham Beattie
  • Ruben Durante
  • Brian Knight
  • Ananya Sen

Abstract

Do news media bias content in favor of advertisers? We examine the relationship between advertising by auto manufacturers in U.S. newspapers and news coverage of car safety recalls. This context allows us to separate the influence of advertisers, who prefer less coverage, from that of readers, who demand more. Consistent with theoretical predictions, we find that newspapers provide less coverage of recalls by their advertisers, especially the more severe ones. Competition for readers from other newspapers mitigates bias, while competition for advertising by online platforms exacerbates it. Finally, we present suggestive evidence that lower coverage increases auto fatalities.

Suggested Citation

  • Graham Beattie & Ruben Durante & Brian Knight & Ananya Sen, 2017. "Advertising Spending and Media Bias: Evidence from News Coverage of Car Safety Recalls," NBER Working Papers 23940, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:23940
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    2. Hinnosaar, Marit, 2019. "Gender inequality in new media: Evidence from Wikipedia," Journal of Economic Behavior & Organization, Elsevier, vol. 163(C), pages 262-276.
    3. Vivek Astvansh & Yen‐Yao Wang & Wei Shi, 2022. "The effects of the news media on a firm's voluntary product recalls," Production and Operations Management, Production and Operations Management Society, vol. 31(11), pages 4223-4244, November.
    4. Anna Kerkhof & Johannes Münster, 2023. "Strategic Complementarities in a Model of Commercial Media Bias," CESifo Working Paper Series 10738, CESifo.
    5. Inge van den Bijgaart & Davide Cerruti, 2024. "The Effect of Information on Market Activity: Evidence from Vehicle Recalls," The Review of Economics and Statistics, MIT Press, vol. 106(1), pages 230-245, January.
    6. Neimanns, Erik & Blossey, Nils, 2022. "From media-party linkages to ownership concentration causes of cross-national variation in media outlets' economic positioning," MPIfG Discussion Paper 22/8, Max Planck Institute for the Study of Societies.
    7. Adam Szeidl & Ferenc Szucs, 2021. "Media Capture Through Favor Exchange," Econometrica, Econometric Society, vol. 89(1), pages 281-310, January.
    8. Heng Chen & Li Han, 2022. "Do the Media Bow to Foreign Economic Powers? Evidence from a News Website Crackdown," HKUST CEP Working Papers Series 202201, HKUST Center for Economic Policy.
    9. Trombetta, Federico & Rossignoli, Domenico, 2021. "The price of silence: Media competition, capture, and electoral accountability," European Journal of Political Economy, Elsevier, vol. 69(C).
    10. Anna Kerkhof & Johannes Münster, 2023. "Strategic Complementarities in a Model of Commercial Media Bias," ECONtribute Discussion Papers Series 261, University of Bonn and University of Cologne, Germany.

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    More about this item

    JEL classification:

    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics
    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising

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