Competition and Ideological Diversity: Historical Evidence from US Newspapers

We study the competitive forces which shaped ideological diversity in the US press in the early twentieth century. We find that households preferred like-minded news and that newspapers used their political orientation to differentiate from competitors. We formulate a model of newspaper demand, entr...

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Bibliographic Details
Published in:The American economic review 2014-10, Vol.104 (10), p.3073-3114
Main Authors: Gentzkow, Matthew, Shapiro, Jesse M., Sinkinson, Michael
Format: Article
Language:English
Subjects:
20th century
Accounting
Advertising
Antitrust
Competition
Competition policy
Contrafactuals
Costs
Economic competition
Economic models
Federal court decisions
Fixed costs
Ideology
Incentives
JOA
Joint operating agreements
News
Political affiliation
Political identity
Press
Prices
Print advertising
Readership
Spectrum allocation
Studies
Subsidies
Towns
U.S.A
Voting
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Summary:We study the competitive forces which shaped ideological diversity in the US press in the early twentieth century. We find that households preferred like-minded news and that newspapers used their political orientation to differentiate from competitors. We formulate a model of newspaper demand, entry, and political affiliation choice in which newspapers compete for both readers and advertisers. We use a combination of estimation and calibration to identify the model's parameters from novel data on newspaper circulation, costs, and revenues. The estimated model implies that competition enhances ideological diversity, that the market undersupplies diversity, and that optimal competition policy requires accounting for the two-sidedness of the news market.
ISSN:0002-8282
1944-7981
DOI:10.1257/aer.104.10.3073