Imagine a scenario where a substantial a part of media sales come from advertisements. Assume extra that consumers’ product preferences are correlated to their political opinions e. g. republicans can be more prone to buy Chevy trucks and Dell computer systems while Democrats may be more prone to buy Toyota and a Mac, to simply point out two categories.
For many product classes here is a plausible state of affairs. If this correlation is high then advertisers are inclined to advertise in media outlets that have bias correlating with their clients’ possibilities as a result of, in this way they’re able to better target their messages. Such “differentiation” in the placement of ads called single homing by the authors is likely to melt price competition. In response to this incentive, the media will become biased as a result of they could have monopoly power over the advertisers. In the opposite case, when such correlation is negligible, firms are inclined to place their advertisements in all media multi homing, which then provides no incentive for media firms not to differentiate on content as it doesn’t help attracting advertisers and consequently makes media firms less likely to slant.
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