Media Capture Through Favor Exchange

Adam Szeidl*, Ferenc Szucs

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

Abstract (may include machine translation)

We use data from Hungary to establish two results about the relationship between the government and the media. (i) We document large advertising favors from the government to connected media, and large corruption coverage favors from connected media to the government. Our empirical strategy exploits sharp reallocations around changes in media ownership and other events to rule out market-based explanations. (ii) Under the assumptions of a structural model, we distinguish between owner ideology and favor exchange as the mechanism driving favors. We estimate our model exploiting within-owner changes in coverage for identification and find that both mechanisms are important. These results imply that targeted government advertising can meaningfully influence content. Counterfactuals show that targeted advertising can also influence owner ideology, by making media ownership more profitable to pro-government connected investors. Our results are consistent with qualitative evidence from many democracies and suggest that government advertising affects media content worldwide.

Original languageEnglish
Pages (from-to)281-310
Number of pages30
JournalEconometrica
Volume89
Issue number1
DOIs
StatePublished - Jan 2021

Keywords

  • Media capture
  • favor exchange
  • government advertising
  • media content
  • owner ideology
  • political connections

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