NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Competition and Ideological Diversity: Historical Evidence from US Newspapers

Matthew Gentzkow, Jesse M. Shapiro, Michael Sinkinson

NBER Working Paper No. 18234
Issued in July 2012
NBER Program(s):   DAE   IO   POL

We study the competitive forces that 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.

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An online appendix is available for this publication.

This paper was revised on September 30, 2013

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Document Object Identifier (DOI): 10.3386/w18234

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