DP4086 Media Capture and Wealth Concentration

Author(s): Giacomo Corneo
Publication Date: October 2003
Keyword(s): mass media, public bads, voting, wealth inequality
JEL(s): D72, H41
Programme Areas: Public Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=4086

While objective news coverage is vital to democracy, media bias can seriously distort collective decisions. This Paper develops a voting model where citizens are uncertain about the welfare effects induced by alternative policy options and derive information about those effects from the mass media. The media might, however, secretly collude with interest groups in order to influence the public opinion. In case of voting over the level of a productivity-enhancing public bad, it is shown that an increase in the concentration of financial wealth makes the occurrence of media bias more likely. Media bias is not necessarily welfare-worsening, but conditions for media bias to increase welfare are restrictive.