The effects of strategic news sources on media coverage

an article by Armando J.Garcia-Pires (Centre for Applied Research at NHH, Bergen, Norway) and Hans Jarle Kind and Lars Sørgard (Norwegian School of Economics (NHH), Norway) published in Information Economics and Policy Volume 41 (December 2017)

Highlights

• Media firms regularly receive information from well-informed news sources.
• News sources might prefer that some information is hidden from the public.
• Profit maximizing media firms may deliberately hide information from their audiences.
• Media firm competition might imply that less information is published.

Abstract

Media firms regularly depend on contacts with well-informed news sources when they cover business and government affairs. However, news sources might have their own agendas and prefer that some information is hidden from the public.

In this paper, we model the relationship between news sources and media firms as informal contracts based on trust and punishment. The interactions between these two types of agents may have a significant impact on the completeness of news coverage in the media.

Profit maximizing media firms may deliberately hide information from their audiences in order to maintain a long-term relationship with a source.

We find that this cunning behavior might become more intensified the tougher the competitive pressure in the media market, since a newspaper risks to lose the source to a rival if it does not withhold information to please the source.

JEL classification: L14, L82

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