Friday, February 11, 2011
Posted by D. Daniel Sokol
Fabrizio Germano (Universitat Pompeu Fabra and Barcelona GSE) and Martin Meier (Institut fur Hohere Studien, Vienna) have an interesting paper on Concentration and self-censorship in commercial media.
ABSTRACT: Within a simple model of non-localized, Hotelling-type competition among arbitrary numbers of media outlets we characterize quality and content of media under different ownership structures. Assuming advertising-sponsored, profit-maximizing outlets, we show that (i) topics sensitive to advertisers can be underreported (self-censored) by all outlets in the market, (ii) self-censorship increases with the concentration of ownership, (iii) adding outlets, while keeping the number of owners fixed, may even increase self-censorship; the latter result relies on consumers' most preferred outlets being potentially owned by the same media companies. We argue that externalities resulting from self-censorship could be empirically large.