A Spatial Theory of News Consumption and Electoral Competition. The Review of Economic Studies

Abstract. This paper introduces a model in which rational vot-ers select news sources with ideological positions similar to their own. We nd that extreme media outlets do not in uence polit-ical outcomes, and that new entry always makes party policies more centrist. In an optimal media, diversity of viewpoints is more important than unbiased reporting. A slightly partisan media outlet, which is trusted by the supporters of a party, is more eective than a completely centrist one in inducing the party to adopt less partisan policies. In a commercial media market, voter welfare is typically higher under duopoly than un-der monopoly. JEL classication. D72, L8