Chapter 10 on media economics of the Internet is a primarily theoretical synthesis of
recent key advances as applied to this emergent sector. The chapter includes discussion of
such pertinent aspects as aggregators, search engines, and Internet service providers.
Chapter 11 covers the topic of privacy and the Internet, which has been an issue of
much public concern and debate. A conceptual framework is developed and related to
empirical estimates. Further topics include advertising, social networks, data security, and
government surveillance.
Chapter 12 addresses user-generated content and social media. It covers an eclectic set
of applications in a fast-moving sector, and pays particular attention to determining the
quality of the content.
Part III: The political economy of mass media, covering the effects of media on polit-
ical, economic, and social outcomes. Chapters 13–17 discuss the media’s political cov-
erage, bias and capture, and the resulting effects on political accountability. Chapter 18
covers effects in finance and Chapter 19 covers effects on social outcomes.
Chapter 13 presents a baseline model of how the information filtering caused by
media coverage affects political accountability. It discusses the welfare consequences
of private provision of news as well as regulation to solve the problem of underprovision
of news. The model also supplies an array of testable implications, used to organize the
existing empirical work. The key questions are: what drives media coverage of politics;
how does this coverage influence government policy, the actions and selection of pol-
iticians, and the information levels and voting behavior of the public?
Chapter 14 discusses how bias may reduce the informativeness of media, undermining
its positive role for political accountability. It surveys the theoretical literature on the
market forces that determine media bias. A simple model is used to organize the literature
on the determinants of bias, focusing first on supply-side forces such as political prefer-
ences of media owners, and then turning to demand-side forces working through con-
sumer beliefs and preferences. The chapter defines bias, analyzes its welfare consequences
and how these are affected by, for example, competition.
Chapter 15 surveys empirical studies of media bias, with a focus on partisan and ideo-
logical biases. The chapter discusses the methods used to measure media bias, the main
factors found to be correlated with media bias and measures of the persuasive impact of
media bias on citizens’ attitudes and behavior.
Chapter 16 surveys models of media capture and media power. In both cases, media
sources deliberately deviate from truthful reporting in order to affect electoral outcomes.
The chapter speaks of media capture when the government has an active role in capturing
the media, and media power when media organizations distort news reporting for polit-
ical ends. The chapter discusses theories of when news manipulation is more likely to
succeed and electoral outcomes are more likely to be distorted. It discusses how media
regulation can reduce the extent of these two phenomena.
xvIntroduction