Does Press Advertising Foster the Pensée Unique?
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- Randolf Allen
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1 Does Press Adverising Foser he Pensée Unique? Jean J. Gabszewicz 1, Didier Laussel and Nahalie Sonnac 3 July 1999 Absrac The press indusry depends in a crucial way on he possibiliy of financing an imporan fracion of is aciviies by adverising receips. We show ha his induces he ediors of he newspapers o moderae he poliical message hey display o heir readers in order o make heir newspaper more aracive as a media suppor for he adverisers, fosering hereby he ascen of he Pensée Unique. 1 CORE, Universié caholique de Louvain. LEQAM, Universié d Aix-Marseille II. 3 ECARE, Universié libre de Bruxelles and LEI-CREST, Paris. We hank M. Craignon, R. Flores, P. Le Floch, V. Ginsburgh and L. Grazzini for heir helpful commens and suggesions. 1
2 As mass adverising grew, he liberal and radical ideas in ediorials, in selecion of news, and in invesigaive iniiaives became a problem. If a paper wished o arac maximum adverising, is explici poliics migh creae a disadvanage. To obain more adverising i needed readers of all poliical persuasions... The answer in he news was a echnique called objeciviy... The docrine of objeciviy... has given American sandard news a profondly esablishmenarian cas. Bagdikian, The Media Monopoly, 199, Inroducion The French expression La Pensée Unique designaes a social conex in which discrepancies among ciizens poliical opinions are almos wiped ou. In his conex, people do no pay much aenion as o wheher poliicians belong o he lef or o he righ: in any case, he plaforms of boh wings mirror each oher. Poliical newspapers or opinion magazines reflec he conex of Pensée Unique, as hey provide very close analyses of he poliical process. Exreme posiions are sofened, or even banished, and heir aricles depic poliical evens hrough he same inerpreaive prisma. The ascen of he Pensée Unique Sociey has been convincingly explained by he phenomenon underlying he median voer heorem. Poliical paries end o propose plaforms which are close o each oher in order o capure voers ballos wih opinions locaed a he cenre. Discrepancies in ciizens poliical preferences are hen progressively wiped ou, simply because paries poliical programs are no differeniaed anymore. In his paper, we inend o show ha his endency is reinforced due o he role played by adverising on he opinions image ha he press ediors are led o display o heir readers. A paricular feaure of he press indusry is ha is profiabiliy depends in a crucial way on financing an imporan fracion of is aciviies by adverising receips. As wih several oher media, he burden of fixed coss is so 1
3 heavy in his indusry ha i would no be able o survive wihou he adverising manna. Accordingly, mos newspapers are sold wice: Firs o he readers who buy he ediorial conen of he newspaper poliical informaion, commenaries and enerainmen, and hen o he indusrial firms and professional adverisers who buy adverising space o promoe heir producs or he producs of heir cusomers. 1 The firs source of financing calls for some maching beween he poliical image presened by he edior of a newspaper, and he poliical preferences of his readers. Oherwise hey could be emped o buy he newspaper supporing he opposie opinion since he laer becomes a closer subsiue o he former. On he oher hand, he second source of financing, relying on adverising receips, requires a sufficienly sizable readership in order o make he newspaper aracive as a media suppor for he adverisers: The impac of he adverising message increases wih he size of he audience. I urns ou, however, ha confirming he poliical preferences of he readers in order o sabilize his readership may well have a negaive impac on he adverising receips of he edior. Take, as an example, a newspaper poliically argeed o he lef. If he edior decides o presen his lefis ideas in a oo exreme manner, confirming hereby he poliical preferences of his exreme lef readership, he may well loose his cusomers who are closer o he cenre, o he benefi of his righis compeior! The resuling reducion of his marke share makes him less aracive o he adverisers: The adverising messages promoing heir producs have now a weaker impac. On he conrary, he righis compeior, now enjoying a larger audience, becomes more appealing o he adverisers! This dependence of adverising receips on he poliical image displayed by he ediors may lead hem o moderae he poliical message of heir newspapers. This endency mus be expeced o be paricularly significan when he readers do no give oo much weigh o he poliical conen of he newspaper, or when adverising receips are srongly correlaed wih he size of he readership. The presen paper develops he above ideas in he framework of a sequenial game involving wo ediorial firms, heir readers and he adverising 1 Newspapers dependence on adverising revenues varies across counries. For insance, in Europe, he percenage of newspapers receips originaing in adverising ranges beween 40 % and 50 %: 40% in France, 45 % in Spain and 50 % in he Nordic region, see Albarran and Chan-Olmsed (1998) and Picard e al. (1988)). In Unied Saes, his percenage can even reach 80 %. Ray (195) calls he middle of he road policies he resuling poliical images proposed by he ediors.
4 agencies buying adverisemens o be insered in heir newspapers. The players of he game are he ediors. The se of poliical opinions ou of which hey selec heir poliical image in he firs-sage game is represened by he uni-inerval. I gives rise o a Downs-Hoelling - like locaion model, in which he prices of he newspapers are hen chosen by he ediors in he second-sage game, assuming ha he readers incur coss which are quadraic in he difference beween heir ideal poliical opion and he poliical opions seleced by he ediors. 3 The novely here is ha a hird-sage game is inroduced, hrough which he ediors now decide non cooperaively abou he adverising ariffs hey will propose o he adverisers. The resuling adverising receips are hen aken ino accoun in he previous price game, influencing accordingly he values of equilibrium prices. This, in urn, feeds back o he opinion selecion process performed by he ediors in he firs-sage of he sequenial game. Wihou he las-sage involving he ediors and he adverisers, he above-game is nohing else han he classical Hoelling s locaion model wih quadraic ransporaion coss, for which i is known ha, a he perfec equilibrium, firms locae a he exremiies of he linear marke (see d Aspremon e al., 1979). In our analogy, i would mean ha he ediors would selec he mos lefis and righis opinions corresponding o he exremiies of he opinions inerval. We show ha he inroducion of adverising receips via he hird-sage adverising game compleely upses he above-predicion of he model in a wide range of siuaions: far from selecing a display of he exreme opinions, he ediors end o presen a similar cenris image o heir readers. These siuaions are precisely hose in which he readers do no give much weigh o heir poliical preferences or when adverising receips are sufficienly significan. I is now easy o undersand how he developmen of press adverising can conribue o he ascen of he Pensée Unique. Being progressively more exposed o raher bland poliical opinions, newspapers readers are led o adop weak poliical preferences, reinforcing hereby he ediors endency o display weak poliical images in view of garnering higher adverising receips. This self-feeding process sponaneously develops homogeneous poliical preferences hrough he populaion, which is he essence of he Pensée Unique conex. We presen he model in Secion. Secion 3 is devoed o he equilibrium analysis of he sequenial game. A shor conclusion develops some implicaions of he preceding ideas. 3 An analysis of compeiion among newspapers using he Hoelling s locaion model has been already proposed by Schulz and Weimann (1989). 3
5 The model We consider a model wih wo ediorial firms, producing each a newspaper a a uni cos per copy, c, c>0, and selling adverising inses o announcers in view of promoing heir producs. The newspapers are sold o he readers who selec o paronize one of he wo newspapers, o he exclusion of he oher. These readers have varying poliical opinions ranging from he exreme lef o he exreme righ. To represen his diversiy among readers opinions, we suppose ha he se of opinions is he uni inerval [0, 1], wih 0 corresponding o he mos exreme lef opinion and 1 o he mos exreme righ one, inermediae opinions being ranked in he inerior of he uni inerval along he lef-righ specrum. To each opinion here corresponds a specific reader for whom ha opinion is he ideal one. The farher he newspaper s opinion from his ideal poin, he higher he disuiliy of his specific reader. More precisely, we shall suppose ha his disuiliy is measured by x i + p i, (1) where x i represens he disance beween he opinion effecively seleced by newspaper i, and he ideal opinion of he reader; p i denoes he price of newspaper i, i =1,. The parameer hus measures he inensiy of readers poliical preferences, while he disuiliy of no obaining heir ideal opinion varies as he square of he disance beween heir ideal opinion and he opinion effecively seleced by he newspaper. In he following, he parameers a and b will denoe he disance beween he exreme opinions 0 and 1, and he opinions chosen by ediors 1 and, respecively: he edior of he lef-opinion (resp. righ-opinion) newspaper accordingly chooses he opinion represened by poin a (resp. 1 b), as depiced in Figure b 1 a b Figure 1: The ads inses are bough by adverising agencies from he ediors of he newspapers a prices s i, i =1,. A paricular adveriser is represened by 4
6 a parameer θ, θ [0, 1], which expresses he inensiy of is preferences for buying an inse in a newspaper. We suppose ha he inensiy θ for buying an inse in newspaper i, i =1,, is muliplied by he audience of newspaper i, namely, by he mass of readers buying his newspaper: he larger he audience, he higher he desirabiliy of buying an ad in he corresponding newspaper, since he larger he number of poenial consumers who will perceive he adverising message. I follows ha he uiliy for buying an inse in newspaper i for an adveriser of ype θ is measured by n i θ s i, i =1, ; θ [0, 1], () wih n i represening he number (mass) of readers who buy newspaper i. 4 In he following, we suppose ha each adverising agency may selec one among he hree following possibiliies: (i) o adverise in neiher newspaper; (ii) o adverise in a single newspaper; (iii) o adverise in boh. In he laer case, we suppose ha is uiliy is measured by n 1 θ s 1 + n θ s. (3) Finally, we suppose ha he densiy of adverisers populaion of ype θ is consan and equal o 4k, θ [0, 1]. In he nex secion, we analyse he subgame perfec equilibrium of he following hree-sage game played by he ediors. In sage 1, each edior selecs he opinion represened by his newspaper: poin a for he edior of he lef opinion-newspaper, and poin 1 b for he edior of he righ one. In he second sage, hey selec he prices p 1 and p of newspapers 1 and, respecively. Finally, in he hird-sage, hey choose he adverising ariffs s 1 and s o be proposed o he adverising agencies. 4 This represenaion of adverisers populaion and of heir preferences is reminiscen of he wellknown model of verical produc differeniaion, in which firms sell producs which are differeniaed by heir qualiy (see Gabszewicz and Thisse (1979)). As in his model, if we assume for insance ha n n 1, an inse in newspaper gives a higher uiliy han an inse in newspaper 1 o all adverisers. However, when his model is used in indusrial economics, i is generally assumed ha consumers make muually exclusive purchases: hey buy one varian of he produc, a he exclusion of he oher. Here we suppose ha adverisers may buy inses in boh newspapers. 5
7 3 Equilibrium analysis 3.1 The adverising game As jus saed a he end of he preceding secion, he sraegies for he ediors in his hird-sage game are he ariffs s 1 and s. The opinions a and 1 b have been already seleced in sage 1, while prices p 1 (a, b) and p (a, b) of he newspapers have been chosen in sage. To hese prices correspond he audiences n 1 = n 1 (p 1 (a, b),p (a, b)) and n = n (p 1 (a, b),p (a, b)) of newspapers 1 and, respecively. Wihou loss of generaliy, le n n 1. Denoe by u(1, ), u(1), u() and u(0) he uiliy levels corresponding o he alernaives consising in buying a ariffs s 1 and s an inse in boh newspapers, in newspaper 1 only, in newspaper only, or buying in neiher newspaper, respecively. Using () and (3), i is easily checked ha (i) u(1) u(0) θ s 1 n 1 ; u() u(0) θ s n ; (4) (ii) u() u(1) θ s s 1 n n 1 ; (5) (iii) u(1, ) u() θ s 1 n 1 ; (6) (iv) u(1, ) u(1) θ s n. (7) Furhermore, we noice ha s s 1 s 1 s s 1. n n 1 n 1 n n 1 (8) Finally, assume ha 5 s 1 s s 1. (9) n 1 n n 1 I is easy o see ha (9) implies s s s 1 (10) n n n 1 for, if he reverse of (10) is assumed, we would obain s 1 > s, n 1 n an inequaliy which conradics (8). Combining inequaliies (8) and (10), we ge s 1 s s s 1. n 1 n n n 1 These inequaliies are depiced in Figure. 6
8 do no buy buy an inse in newspaper 1 buy an inse in boh newspapers 0 s 1 s s s 1 1 n 1 n n n 1 Figure : [ ] The adverising agencies ypes θ included in he inerval s n, 1 buy an inse in boh newspapers since, according o [ (4) and ] (6), u(1, ) >u() >u(0) and u(1, ) >u(1); hose in he inerval s1 n 1, s n buy an inse in newspaper 1 only since, for hese ypes θ, u(1) >u(0), u(1, ) <u(1) and u(1) >u() (see (4), (7) and (5)). Consequenly, demand[ o edior ] 1 is made of all he adverising agencies ypes θ in he inerval s1 n 1, 1 and demand o edior [ ] of he adverising agencies ypes θ in he inerval s n, 1. Accordingly, he demand funcion D i for adverising inse in newspaper i wries as ( D i (s 1,s )=4k 1 s ) i ; for i =1, n i wih corresponding receips ( R i (s 1,s )=4k 1 s ) i s i ; i =1,. (11) n i We noice ha he receips of edior i do no depend on he ariff s j seleced by his rival j, and vice versa, so ha he game beween he ediors on he adverising marke is degenerae : each edior i behaves as a monopolis and selecs independenly he equilibrium ariff s i = n i, leading o he equilibrium receips R i (s 1,s )=kn i. (1) In he nex secion we examine he second-sage game hrough which he prices of he newspapers are deermined, when he equilibrium adverising receips we have jus deermined are aken ino accoun in he evaluaion of oal receips of he ediors. 5 This assumpion holds if here exis consumers who buy an inse in newspaper 1 only, since hen he se {θ u(1) u() and u(1) >u(0)} is non empy. 7
9 3. The price game In he second-sage game, he ediors use as sraegies he prices p 1 (a, b) and p (a, b). As above, we suppose ha he opinions a and 1 b have been already seleced in sage 1 and derive he profis funcions of he ediors when he adverising receips deermined in he hird-sage game are inegraed in hese profis. Taking (1) ino accoun, he demand funcions n i (p 1,p ) are easily derived, namely n 1 (p 1,p ) = 0, if a + p p 1 (1 a b) + 1 a b < 0; = a + p p 1 (1 a b) + 1 a b if 0 a + p p 1 (1 a b) + 1 a b 1; = 1 if 1 a + p p 1 (1 a b) + 1 a b ; n (p 1,p ) = 0, if b + p 1 p (1 a b) + 1 a b < 0; and = b + p 1 p (1 a b) + 1 a b, if 0 b + p 1 p (1 a b) + 1 a b 1; = 1, if 1 b + p 1 p (1 a b) + 1 a b. The corresponding profis Π i, i =1,, are given by Π i (p 1,p ) = (p i c)n i (p 1,p )+kn i (p 1,p ), or Π i (p 1,p ) = (p i + k c)n i (p 1,p ) when he equilibrium adverising receips kn i (p 1,p ) have been inegraed. Consequenly, he second-sage game we analyse is equivalen o a spaial compeiion model wih quadraic ransporaion coss, when a consan uni subsidy equal o k c, he difference beween he uni receip originaing from adverising sales and he uni producion cos of each copy of he newspaper is added o he price. The reacion funcions corresponding o he price game are given by p 1 = max{0, 1 (c k + p + b + b a )} (13) p = max{0, 1 (c k + p 1 + a + a b )}. (14) Several parameric regions have hen o be considered. In he following R i will denoe he se of couples (a, b) [0, 1] saisfying he inequaliies which 8
10 define region i. Region 1: c k+(1 a b)(1+ a b b a 3 ) 0(A) and c k+(1 a b)(1+ 3 ) 0 (B). Adding up one obains: c k + (1 a b) 0. Then equilibrium prices are derived from he firs-order necessary condiions Π i p i =0,i =1,, or p 1 = c k + (1 a b)(1 + a b 3 ) while profis Π i p = c k + (1 a b)(1 a b 3 ), a equilibrium obain as Π 1(a, b) = 18 (1 a b)(a b 3), (15) and Π (a, b) = 18 (1 a b)(b a 3). (16) Π 1 (resp. Π ) is a sricly decreasing funcion of a (resp. b) for all (a, b) R 1. Region : c k + a + a b < 0(C) and c k + b + b a < 0 (D). Adding up one obains c k + (1 a b) < 0. Regions 1 and are hence muually exclusive. Then equilibrium prices are given by p 1 = p =0 (see (13) and (14)) wih profis ( ) 1+a b Π 1(a, b) = (k c) ; (17) ( ) 1+b a Π (a, b) = (k c). (18) If k>c,π 1 (resp. Π ) is a sricly increasing funcion of a (resp. b) for all (a, b) R. Region 3: c k +(1 a b)(1+ a b 3 ) < 0(E) and c k + a+a b 0 (F ). These wo inequaliies ogeher imply a < b.then equilibrium prices are given by p 1 = 0 p = 1 (c k + a + a b ) (see (14) wih p 1 = 0), wih corresponding profis Π 1(a, b) = 1 ( 3 +a +4b + a 4 (k c) b ) c + k ; (a + b 1) (19) Π (a, b) = 1 ( a + a b c + k). 8 ( 1+a + b) (0) 9
11 We noice ha, in region 3, we have necessarily a<b. I is shown in he Π Appendix ha, in R 3, 1 a < 0. Furhermore, i is also shown in he Appendix ha, in region 3, Π is sricly increasing in b whenever k<c+ 3 and a> 1 ( 3 3 k 3 3 c), or k c + 3. Oherwise here is a local maximum for b = 1 6 ( 4a +4 a a + 3k +3c). Region 4: c k+ b+b a 0(G) and c k+ 4 3 a+ 1 3 a 1 3 b 3 b < 0(H). These inequaliies ogeher imply a>b. Hence, regions 3 and 4 are muually exclusive. Then equilibrium prices are given by p 1 = 1 (c k + b + b a ) p = 0, (see (13) wih p = 0) wih corresponding profis Π 1(a, b) = 1 ( b + b a c + k) ; 8 ( 1+a + b) (1) Π (a, b) = 1 4 (k c)( 3 +b +4a + b a c + k). (a + b 1) () By he same argumen as he one used for region 3 (see Appendix), Π 0, (a, b) R 4. Similarly Π 1 is a sricly increasing funcion of a whenever k<c+ 1 3 and b> ( (3 3 k 3 3 c)), or k c + 3. Oherwise here is a local maximum for a = 1 6 ( 4b +4 b b + 3k +3c). b < Finally, noice ha equilibrium prices are coninuous funcions of a and b over he four regions and so are as well as equilibrium profis Π 1 and Π. Now, using he equilibrium prices we have jus derived, we analyse he firs-sage game, hrough which ediors selec he opinion hey will display o heir readers. 3.3 The opinion game In he firs-sage game, he ediors selec he opinion which idenifies heir newspaper, aking ino accoun he effecs of heir choice on ensuing compeiion in price and adverising ariffs. Payoffs in his game, as funcions of a and b, are defined by (15) and (16), in region 1, (17) and (18) in region, (19) and (0 ) in region 3, and (1) and () in region 4. Now we sae he following: 10
12 Lemma 1 The pair of sraegies (a,b )=(0, 0) is a Nash equilibrium of he opinion game if, and only if, k c +. (3) Proof. See Appendix. Lemma The pair of sraegies (a,b )=(0.5, 0.5) is a Nash Equilibrium of he opinion game if and only if k c (4) Proof. See Appendix. Lemmas 1 and can be summarized in he following: Proposiion 1 When k<c+ 5 7, he opinion game has as unique equilibrium (a,b )=(0, 0). When c k c +, he opinion game has wo equilibria (0, 0) and (0.5, 0.5). When c + <k, he opinion game has as unique equilibrium (a,b )= (0.5, 0.5). Proof. See Appendix. Finally, noice ha Π i (0, 0) = Π i ( 1, 1 k c +, which implies ha Π i (0, 0) > Π i ( 1, 1 ) in he domain of k-values where boh (0, 0) and ( 1, 1 ) are Nash equilibria. Accordingly, he N-E (0, 0) Pareo dominaes he equilibrium ( 1, 1 ) in his domain. Figure 3 represens he NE s in he (k, )-plane. )= k c As expeced, he equilibrium (0, 0) leading o a maximal opinion differeniaion beween he wo newspapers, obains when he uni receip k from adverising is small, while he inensiy of readers poliical preferences is high (k <c+ 5 7). Conversely, minimal opinion differeniaion mus be expeced in he reverse case (weak poliical preferences and high uni adverising receips). I should be noiced ha when he equilibrium in he opinion game is 11
13 k ( ) 1 1, (0, 0) and ( ) 1, 1 k = c + k = c c (0, 0) Figure 3: ( 1 ), 1, he resuling equilibrum newspapers prices in he second sage game are zero. Even if zero newspapers prices are no generally observed, one mus recognize ha he endency for alernaive medias o supply consumers wih free services is nowadays frequen. For insance, consumers can read free of charge newspapers or abbreviaed versions of hem on Inerne. Similarly, some elephone companies provide consumers wih free of charge lines provided ha hey accep adverising inerrupions during heir connecions! Such pracices reveal ha adverising receips become so imporan ha hey jusify o provide hese services free of charge, simply in order o uilize hem as adverising suppors. I is a similar phenomenon which is refleced in he fac ha newspapers are provided free of charge a equilibrium. Thus we conclude ha he inroducion of he las sage adverising game has considerable consequences on he equilibrium of he opinion game. Indeed, wihou he hird-sage game, maximal opinion differeniaion would arise for all values of k and : he quadraic ransporaion coss imply, indeed, ha a he perfec equilibrium, candidaes would locae a he exremes of he opinions inerval. As shown in he above proposiion, his endency is fully reversed when poliical preferences are weak or when uni adverising receips are sufficienly high. 1
14 4 Conclusion Informaion press is one of he major vecors of media s ideological messages. In paricular, daily newspapers and news are mean o reflec he ciizens poliical opinions. Conversely, hese opinions are shaped hrough he ediorial opions of heir ediors. However, he ideological messages which newspapers convey o heir readers inerfere wih he adverising messages promoing commercial producs, which are simulaneously addressed o hem. Ediors are consrained o accep hese inerferences in order o guaranee a level of oal receips which is high enough o cover heir fixed coss. Adverising induces ediorial firms o compee for a maximal audience: Adverising receips are all he more significan ha he size of he readership is large. As shown in his paper, he price o be paid by he ediors in order o sell a larger audience o he adverisers, may well force hem o sell aseless poliical messages o heir readers. This is urn consiues he fermen of he Pensée Unique, hrough which ciizens poliical opinions are uniformly leveled. I should be poined ou ha, in our approach, adverisers do no influence direcly he ediorial conen, as i would be he case when an edior is consrained o conform his ediorial views wih hose ediced by some major adveriser sponsoring he newspaper. Their influence here is only indirec: I operaes hrough he compeiion among he ediors, who wish o increase he audience each of hem is willing o sell o adverisers. To summarize, he main difference beween he selecion of policies by candidaes compeing in an elecion and he selecion of a poliical image by newspapers ediors lies in he fac ha he laer mus also choose he price of he newspaper and evenually he ariff o be opposed o he adverisers. In oher words, he game which has poliical candidaes as players is a one-sho game wih sraegies consising only in choosing a specific poliical plaform. The equilibrium of his game is known o be a he cener (he median voer heorem). The game played by newspapers ediors is by essence a sequenial game. If his game is as in Hoelling (199), in which firms choose sequenially heir locaion and hen heir price, he perfec equilibrium of he game depends on he seleced ransporaion cos funcion. In he case of linear ransporaion coss, here is a large domain of locaions, in which no perfec equilibrium exiss. If coss are quadraic, hen a perfec equilibrium always exiss, bu firms (or ediors) locae a he exremes of he locaions (opinions ) se (see d Aspremon e al. (1979)). When a hird-sage game is played beween he ediors o deermine he adverising ariffs, he perfec equilibrium comes back o he cener when poliical preferences are weak or when uni 13
15 adverising receips are high. The sory considered in his paper is reminiscen of candidaes behaviour when hey have o sele heir poliical plaform before compeing in an elecion. In order o influence voers who are uninformed abou heir policy, hey need he money manna provided by heir ineres groups, he amoun of which increases as he seleced poliical posiion ges closer o heir parisan ineress. Bu, a he same ime, informed voers whose voe is based on he seleced poliical posiion iself, could be hereby divered, and would prefer o cas heir voes on he rival candidae if he laer would behave in a less parisan manner. Finally, he plaform which is effecively proposed, is he resul of he rade-off beween choosing a plaform which aracs funds and a policy which aracs he informed voers (see Baron, 1994). I should also be noiced ha he sofening of poliical opinions is no he only device used by ediorial firms in view of increasing heir readership s marke share so as o please o heir adverisers. Diversificaion of heir ediorial conen, inroducion of culural supplemens, presenaion of TV-programs, ec. are alernaive mehods aracing readers who are less concerned by he specific poliical ideas of he newspaper han by is objecive informaional conen. This also conribues o enhance a kind of poliical neuraliy among newspapers since he pages devoed o hese alernaive conens are ineviably subsiued o hose previously dedicaed o poliical analysis. Finally, governmen s subsidies o firms ediing newspapers can also be evaluaed a he ligh of he above analysis. The exisence of such subsidies is generally moivaed by he willingness of mainaining a sufficien diversiy among ciizens opinions (he conrary of he Pensée Unique!). When adverising receips of a newspaper are oo weak eiher because is readership is oo narrow o be aracive for adverisers, or because he edior simply refuses o be corruped by adverising (like he French newspaper Canard Enchaîné ), he financial basis of some iles can be insufficien o cover heir fixed coss. Then hese iles canno survive, enailing hereby he disappearance of he opinions hey represen. In order o preven his reducion in opinions diversiy, he governmen may be inclined o subsidize hese iles. If he size of he subsidy would be proporional o he sales of he newspaper, i would play exacly he same role as uni adverising receips in he above analysis. As a consequence, he subsidy creaes an incenive for he ediors of hese newspapers o modify heir poliical image in order o increase heir sales and, hereby, he size of he subsidy! Accordingly, far from reaching he ob- 14
16 jecive of mainaining opinions diversiy, subsidies proporional o sales would on he conrary reinforce he leveling of opinions hrough he populaion! On he conrary, a lump sum subsidy covering he fixed coss of he newspaper allows is edior o coninue his aciviies, and realizes accordingly he objecive of keeping he specrum of poliical opinions sufficienly diversified. 15
17 References [1] Albarran, A.B. and S.M. Chan-Olmsed. Global Media Economics. Iowa Sae Universiy Press, [] Bagdikian, B.H. The Media Monopoly, 4h ed. Boson, Beacon Press, 199. [3] Baker, C.E. Adverising and a Democraic Press. Princeon Universiy Press, [4] Baron, D.B. Elecoral compeiion wih informed and uninformed voers. American Poliical Science Review, 88, 33 47, [5] d Aspremon, C., Gabszewicz, J.J. and J. Thisse. On Hoelling s sabiliy in compeiion. Economerica, 47, , [6] Gabszewicz, J.J. and J. Thisse. Price compeiion, qualiy, and income dispariies. Journal of Economic Theory, 0, , [7] Hoelling, H. Sabiliy in compeiion. Economic Journal, 39, 41 57, 199. [8] Picard, R.G., M.E. McCombs, J.P. Winer and S. Lacy. Press Concenraion and Monopoly. Norwood (New Jersey), Ablex Publishing Corporaion, [9] Ray, R. Economic forces as facors in daily newspaper concenraion. Journalism Quarerly. 9, 31 4, 195 (Winer). [10] Schulz, N. and J. Weimann. Compeiion of newspapers and he locaion of poliical paries. Public Choice, 63, , [11] Sonnac, N. Press and adverising: he pricing of adverising press. Working Paper, CREST-LEI, Paris,
18 Appendix Properies of Π 1 (a, b) and Π (a, b) in regions 3 and 4 For any (a, b) R 3, we obain Π 1 a = 1 4 (k c) b + + a +ab a + b + c k (a + b 1) ; Π 1 a = (k c) (a + b 1) 3 < 0; Π b = (k c + a + a b )(k c + a + a +4ab +3b 4b) 8(a + b 1). (a) Le us show ha Π 1 a < 0, (a, b) R 3. Noe firs ha, from he sric concaviy of Π 1 (a, b) wih respec o a, Π 1 a < 0 a>1 b k c. Now condiion (E) and (1 a b) 1+ a b 3 c k + (1 a b) c k + (1 a b)(1 + a b 3 ) < 0 1 a b< k c. 6 (b) Le us now analyze he properies of Π as a funcion of b in R 3; condiion (F) a + a ( b k c (k c + a + a b ) Π ) (k c) > 0 sign b = sign(k c+ a+a +4ab+3b 4b). Sraighforwardly k c + a + a +4ab +3b 4b has a mos wo roos in b which are given by b 1 = 1 ( ) 4a +4 + ( 6 a a + 3k +3c) b = 1 ( ) 4a +4 ( 6 a a + 3k +3c). The roo b 1 corresponds o a local minimum since Π b (a,b 1 ) = (k c + a + a b 1) ( a a + 3k +3c) 8(a + b 1 1) > 0. 6 Noe ha k mus no be lower han c if R 3. 17
19 The roo b corresponds o a local maximum since Π b (a,b ) = (k c + a + a b ) ( a a + 3k +3c) 8(a + b 1) < 0. On he oher hand Π is sricly increasing in b whenever eiher ( a a + 3k +3c ) < 0 k<c+ 3 and a> ( 1 ) (3 3 k 3 3 c),ork c + 3. Proof of Lemma 1 Firs noice ha he condiion k c + implies ha boh prices are posiive a (a,b )=(0, 0). Now suppose ha one of he ediors, say edior, wans o deviae unilaerally from (0, 0) o some (0,b) where b>0. Only deviaions leading in regions and 3 need o be considered. No deviaion o region 4 is possible since in his region a>b,wha is clearly impossible since a = 0. On he oher hand any deviaion o an opinion b in region 1 leads o lower profis since Π b < 0 in his region. If he edior conemplaes a deviaion in region (where Π b = k c > 0) his bes deviaion is b =1, yielding profis equal o k c. Hence (0, 0) is a NE of he opinion game only if k c Π (0, 0) =. I remains o show ha his condiion is also sufficien. +3(k c) c k+ ]. 7 This amouns o show ha a deviaion in region 3 never leads o profis larger han k c, i.e. ha a deviaion o (0, 1) is always he bes (unprofiable) deviaion. Since a = 0, deviaing in region 3 implies choosing values of b saisfying condiions (E) and (F), i.e. such ha b (, When Π (0,b) is monoone and/or convex in b over region 3 he bes deviaion for edior sraighforwardly remains oward b = 1. The only case which has now o be considered is when Π (0,b) has a local maximum in region 3. As shown above, his can occur only for b = ( +3c 3k) where ( ) Π (0,b )= 3k 3c++ ( 3k+3c) 7. One can check ha Π (0,b ) >k c + ( 3k+3c) k<c+ 4. Bu, from condiion (E), (0,b) R 3 k> c>c+ 4 : 7 Since k<c+ such an inerval [ is non void. Noe ] ha region 1, where Π is sricly decreasing in b, obains for b 0, +3(k c) and region, where Π is sricly [ c k+ ] increasing in b, for b, 1. 18
20 he bes deviaion in region 3 is accordingly always dominaed by a deviaion oward b =1. Consequenly, he condiion k c + is no only necessary bu also sufficien. Proof of Lemma Le us consider edior 1 whose profis are given by Π k c 1 (0.5, 0.5) =.. A deviaion o a value of a leading in region 4 is o be discarded since in his region b<a.a deviaion leading in region is no profiable since in his region a =.5 is he bes reply agains b =.5. The bes deviaion in regions 1 or 3 leads o a = 0 since in hese regions Π 1 a < 0. From he condiions defining he differen regions, (0, 0.5) R 1 when k c + 5 1, and (0, 0.5) R 3 iff k (c ,c + 4 ]. I follows ha Π 5 1 (0, 0.5) = 144 iff k c and Π 1 (0, 0.5) = (k c)(c k +1.5) iffk (c + 1,c+ 4 ]. Whenever (0, 0.5) R 3 here is no profiable deviaion from (0.5, 0.5) since Π 1 (0, 0.5) Π 1 (0.5, 0.5) k c + 4, a condiion which holds always rue in region 3. Whenever (0, 0.5) R 1, Π 1 (0, 0.5) Π 5 1 (0.5, 0.5) k c + 7. Proof of Proposiion 1 I only remains o show ha (0, 0) and (0.5, 0.5) are he only possible Nash Equilibria of he opinion game. Noice firs ha (0, 0) and (0.5, 0.5) are he only possible N.E. respecively in regions 1 and. Hence any oher N.E. (a,b ) should belong o R 3 or R 4. Le us assume wihou loss of generaliy ha (a,b ) R 3. Since, as shown above, Π 1 < 0, (a, b) R 3, we mus conclude a +3(k c), ha a = 0 and hence b ( c k+ ] where c k+ < 1 8. Since Π is sricly decreasing in b for all b +3(k c) (i.e. in region 1) and sricly increasing in b for all b> c k+ (i.e. in region ), b mus correspond o a local maximum of Π wih respec o b over ( +3(k c), c k+ ], ha is b = ( +3c 3k). However we have already shown (see Proof of Lemma 1) ha Π (0, ( +3c 3k)) < Π (0, 0) and hence ha a sraegy b such ha (0,b) R 3 is never a bes reply o a =0. 8 In he reverse case (i.e. c k) he only equilibrium is obviously in region 1. 19
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