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, Revised in September 2013
NBER Program(s):Development of the American Economy, Industrial Organization, Political Economy

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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Document Object Identifier (DOI): 10.3386/w18234

Published: Matthew Gentzkow & Jesse M. Shapiro & Michael Sinkinson, 2014. "Competition and Ideological Diversity: Historical Evidence from US Newspapers," American Economic Review, American Economic Association, vol. 104(10), pages 3073-3114, October. citation courtesy of