Media plurality : private versus mixed duopolies

Abstract

In this paper, we analyze the effects on media plurality of competition between a private news firm that maximizes profits and a publicly owned news firm that maximizes social welfare. We show that when the costs of adapting news to readers’ political preferences are high relatively to the intensity of the readers’ political preferences, profits in the industry are lower, but prices, media plurality, consumer surplus, and social welfare are higher in the mixed duopoly than in the private duopoly case. The contrary is true when the costs of adapting news to readers’ political preferences are low relatively to the intensity of the readers’ political preferences. This result is confirmed with the introduction of advertising and inefficiencies of the public firm.