Journal Of The Econometric Society

An International Society for the Advancement of Economic
Theory in its Relation to Statistics and Mathematics

Edited by: Guido W. Imbens • Print ISSN: 0012-9682 • Online ISSN: 1468-0262

Econometrica: Jan, 2022, Volume 90, Issue 1

Media Competition and Social Disagreement
p. 223-265

Jacopo Perego, Sevgi Yuksel

We study the competitive provision and endogenous acquisition of political information. Our main result identifies a natural equilibrium channel through which a more competitive market decreases the efficiency of policy outcomes. A critical insight we put forward is that competition among information providers leads to informational specialization: firms provide relatively less information on issues that are of common interest and relatively more information on issues on which agents' preferences are heterogeneous. This enables agents to acquire information about different aspects of the policy, specifically, those that are particularly important to them. This leads to an increase in social disagreement, which has negative welfare implications. We establish that, in large enough societies, competition makes every agent worse off by decreasing the utility that she derives from the policy outcome. Furthermore, we show that this decline cannot be compensated by the decrease in prices resulting from competition.

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Supplement to "Media Competition and Social Disagreement"

This online appendix contains material not found within the manuscript.