DP17920 Political Determinants of the News Market: Novel Data and Quasi-Experimental Evidence from India
Information conveyed through news media influences political behavior. But to what extent are media markets themselves shaped by political determinants? We build a novel panel dataset of newspaper markets in India from 2002 to 2017 to measure the impact of changes in electoral importance on how news markets develop over time. We exploit the announcement of an exogenous change in the boundaries of electoral constituencies to causally identify the relationship between the (future) electoral importance of news markets and the change in the number and circulation of newspapers. Using both an event-study and a staggered difference-in-differences approach, we show that markets that became more electorally important experienced a significant rise in both circulation and the number of titles per capita. Both supply and demand seem to drive the increase, but we estimate that the former explains almost all the variation in the short run and around 50% in the long run. Finally, we document how effects vary with prior levels of political competition and newspapers' characteristics, and discuss implications for voting behavior and democratic accountability.