Abstract

We study the competitive provision and endogenous acquisition of political information. Our main result identifies a natural equilibrium channel through which a more competitive market for information increases social disagreement. A critical insight we put forward is that competition among information providers leads to a particular kind of informational specialization: firms provide relatively less information on issues that are of common interest and relatively more information on issues along which agents' preferences are more heterogeneous. This enables agents to find information providers that are better aligned with their preferences. While agents become better informed on an individual level, the social value of the information provided in equilibrium decreases, thereby decreasing the probability that the society will implement socially optimal policies.

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Citation

Perego, Jacopo, and Sevgi Yuksel. "Media Competition and Social Disagreement." Columbia Business School, June 7, 2018.

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