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Newspapers and Parties: How Advertising Revenues Created an Independent Press

Published online by Cambridge University Press:  26 October 2011

MARIA PETROVA
MARIA PETROVA*
Affiliation:
New Economic School
*
Maria Petrova is UBS Assistant Professor of Economics, New Economic School. Office 1721, Nakhimovsky pr. 47, Moscow 117418Russia (mpetrova@nes.ru).
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Abstract

Media freedom strongly inhibits corruption and promotes good governance, but what leads to media freedom? Do economic development and higher advertising revenues tend to make media outlets independent of political groups' influence? Using data on nineteenth-century American newspapers, I show that places with higher advertising revenues were likelier to have newspapers that were independent of political parties. Similar results hold when local advertising rates are instrumented by regulations on outdoor advertising and newspaper distribution. In addition, newly created newspapers were more likely to enter the market as independents in places with higher advertising rates. I also exploit the precise timing of major changes in advertising rates to identify how advertising revenues affected the entry of new newspapers. Finally, I demonstrate that economic development, and concomitant higher advertising revenue, is not the only reason that an independent press expands; political factors also played a role.

Type
Research Article
Information
American Political Science Review , Volume 105 , Issue 4 , November 2011 , pp. 790 - 808
Copyright
Copyright © American Political Science Association 2011

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