Media, fake news, and debunking

Ngo Long, Martin Richardson and Frank Stähler

ANU Working Papers in Economics and Econometrics from Australian National University, College of Business and Economics, School of Economics

Abstract: We construct a Hotelling-type model of two media providers, each of whom can issue fake and/or real news and each of whom can invest in the debunking of their rival's fake news. The model assumes that consumers have an innate preference for one provider or the other and value real news. However, that valuation varies according to their bias favoring one provider or the other. We demonstrate a unique subgame perfect Nash equilibrium in which only one firm issues fake news and we show, in this setting, that increased polarization of consumers - represented by a wider distribution - increases the prevalence of both fake news and debunking expenditures and is welfare reducing. We also show, interalia, that a stronger preference by consumers for their preferred provider lowers both fake news and debunking. Finally, we compare monopoly and duopoly market structures in terms of "fake news" provision and show that a public news provider can be welfare improving.

Keywords: fake news; media; debunking (search for similar items in EconPapers)
JEL-codes: D21 L15 L82 (search for similar items in EconPapers)
Date: 2018-02
New Economics Papers: this item is included in nep-cul, nep-mic, nep-mkt and nep-pol
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Related works:
Journal Article: Media, fake news, and debunking (2019)
Working Paper: Media, Fake News, and Debunking (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:acb:cbeeco:2018-659

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