Handcuffs  for  the  Grabbing  Hand?  Media  Capture  and  Government  Accountability  

by    Timothy  Besley  and  Andrea  Prat  (2006)

     

Group  Hicks:  Dena,  Marjorie,  Sabina,  Shehryar  

     

“To the press alone, checkered as it is with abuses, the world is indebted for all the triumphs which have been gained by reason and humanity over error and oppression.”

James Madison, Report on the Virginia Resolutions, 1798      “Better scrutiny leads to reduced corruption and stronger democracies in all society’s institutions, including government, corporations and other organizations. A healthy, vibrant and inquisitive journalistic media plays a vital role in achieving these goals.” Wikileaks, on the importance of a free media                      

Introduction    Media  plays  a  very  important  role  in  any  kind  of  government,  especially  in  democracies.  Examples  from  various  countries  that  move  from  an  autocracy  towards  democracy  offer  support.  One  of  the  most  important  roles  of  the  media  is  to  act  as  a  check  on  corrupt  politicians,  businessmen,  bureaucrats,  and  generally  on  governments  as  a  whole.  But  media  itself  might  be  influenced  by  these  actors  and  might  not  always  divulge  all  the  information  it  has.  The  way  this  influence  is  exerted  might  take  various  forms;  from  direct  cash  bribes  to  favorable  legislation  affecting  the  media  owners.      The  main  purpose  of  this  paper  is  to  give  economic  clarification  of  when  a  government  has  the  incentive  to  capture  media  and  the  circumstances  under  which  it  becomes  possible  and  its  political  consequences.    

 In  the  given  model,  the  media  can  make  profits  from  either  its  commercial  (audience-­‐related)  operations  or  from  collusion  with  the  government.  It  only  reports  verifiable,  negative  information  and  therefore,  the  probability  of  an  incumbent’s  reelection  decreases  with  news  reported.  The  incumbent  has  the  incentive  to  remain  in  power  to  extract  rents  from  his  political  authority.  The  probability  of  negative  information  being  discovered  by  the  media  is  an  increasing  function  of  the  amount  of  rent  extracted  and  media  independence.  

 Therefore,  independent  media  reporting  truthful  news:    

1)  influences  the  outcome  of  elections  through  altering  voter  opinion  (by  increasing  the  possibility  of  turn-­‐over)  

2)  forces  incumbents  to  extract  less  rent                  This  implies,  as  mentioned  in  the  paper  that  “scandal  free  countries  have  either  an  extremely  independent  media  industry  or  extremely  pliable  one.”  

 Thus,  incumbents  have  the  incentive  to  “silence”  media.  However  the  possibility  of  media  capture  is  restricted  by  the  amount  of  rent  that  can  be  obtained.    

 Media  can  accept  2  types  of  kickbacks:    Direct  money  transfers  and  favorable  policies.  

 The  paper  proves  that:  

1) A  larger  number  of  media  outlets  reduce  the  risk  of  capture.  2) Independence  of  media  also  decreases  the  risk  of  capture.  Here,  independence  of  the  media  is  

measured  by  the  difficulty  of  transferring  resources  to  media.  3) Media  capture  impacts  the  political  process  by  reducing  turnover  and  increasing  rent  seeking  

behavior.      

   

I.  The  Baseline  Model  

We  are  faced  with  a  two  period  retrospective  voting  model  with  three  groups  of  players:  

Media  

• We  have  !  identical  active  media  outlets  that  look  for  verifiable  information  to  report  

• They  have  two  sources  of  income:    o Audience  related  revenues  that  include  sales,  subscriptions,  etc.;  we  will  refer  to  the  

maximum  revenues  of  this  kind  as  !.  o Collusion  related  revenues  that  include  direct  bribes,  favorable  policies  generating  

revenues  such  as  in  the  FIAT  group  example  (FIAT  group  controlled  two  of  the  top  three  

Italian  newspapers  until  2003  and  benefited  from  restrictions  on  car  imports  from  Asia).  

• If  ! ≤ !  firms  report  a  piece  of  informative  news  and  share  audience  related  revenues  such  

that  each  firm  gets    !!.  Voters  prefer  informative  news,  and  we  normalize  the  revenues  from  

uninformative  news  to  0.  • Media  observe  no  signal  if  an  incumbent  is  good.  For  bad  incumbents  media  observe  a  verifiable  

signal  with  probability  !  where  !  is  dependant  on  technology,  institutions,  censorship  levels,  libel  laws,  and  privacy  protection  regulations.  

Politicians  

• Incumbents  we  meet  in  the  first  round  are  exogenously  in  power  and  can  be  good-­‐g  or  bad-­‐b  

(assume  nothing  in  between).  That  is,  a  politician  is  described  by  !  such  that  !"  {!,!}  and  the  ! ! = ! = !.  

• Incumbents  are  allowed  to  manipulate  news  and  this  is  modeled  as  a  bargaining  game.  News  is  

only  printed  if  it  is  both  bad  and  verifiable  so  our  incumbents’  only  strategy  is  to  hide  bad  news  by  offering  media  a  transfer  in  exchange  for  their  silence.  Note  that  since  all  media  receive  the  

same  information  in  the  basic  model  the  incumbent  must  successfully  silence  all  media  and  thus  will  either  ‘pay’  off  all  outlets  or  none.    

• Transfers  cost  the  incumbent  !!  per  media  outlet  and  yield  !!/!  for  each  outlet  where  !! > 0.  The  !!  range  from  direct  monetary  transfers  in  the  form  of  cash  bribes  to  more  indirect  benefits  (favorable  policies)  and  the  !  represent  transaction  costs  ranging  from  0  when  its  easy  to  make  

transfers  to  ∞  when  it  is  impossible  to  make  transfers.  o Media  types  play  a  role  in  transaction  costs.  State  owned  media  likely  have  the  lowest  

transaction  costs,  privately  owned  media  outlets  are  more  likely  to  receive  benefits  if  

their  owners  have  homogeneous  interests,  and  cross  ownership  situations  lend  themselves  nicely  to  favorable  policy  arrangements.    

o Legislative  constraints  are  an  example  of  transaction  costs.    

• Payoffs:    If  re-­‐elected:    ! − !!!∈!  ;  if  not  re-­‐elected    − !!!∈! .  

Voters  

• Homogeneous  electorate  that  makes  their  voting  decisions  using  all  the  information  available  at  

the  time  of  the  election.  

• Voters  do  not  observe  their  payoffs  at  the  time  of  the  reelection  decision  (long  term  projects  

etc.)  and  always  vote  for  the  candidate  they  prefer  (consequence  of  Perfect  Bayesian  equilibrium  where  voters  use  undominated  strategies)    

• Payoffs:    from  bad  incumbents  0  and  from  good  incumbents  1.  

Key  Assumptions  of  the  Basic  Model  

1. Only  verifiable  information  can  be  printed  2. Signals  can  only  be  bad  

3. All  media  have  the  same  information  (since  they  are  identical  and  all  have  the  same  technology  and  exist  in  the  same  environment)    

4. Incumbent  knows  what  signal  the  media  have  received  and  can  ask  them  to  verify  

5. Incumbent  makes  offers  after  signals  are  realized.  (*Underlying    assumption  that  all  parties  are  risk  neutral  in  which  case  it  makes  no  difference  if  incumbent  makes  offers  before  or  after  realization).  

Timing  

Step  1:    

Incumbents  type(  !)  is  realized;    ! ! = ! = !  

• Signals  

o If  good,  no  signal  goes  out;    ! ! = ∅ = 1  o If  bad,  we  place  a  probability  on  whether  a  signal  goes  out    ! ! = ! = !    and    ! = ∅  

otherwise  

• Incumbent  observes  media  signal  and  selects  a  transfer    !! ≥ 0  for  each  outlet  !  

Step  2  

Media  outlet  !  observes  transfer    !!  

• If  accepts,  reports  ! = ∅  and  receives    !!/!  • If  rejects,  reports  the  true  signal  and  receives  !/!  where  !  is  the  number  of  other  outlets  also  

reporting  the  true  signal.  

Step  3  

Voters  observe  signals  and  vote  for  incumbent  or  a  challenger  of  unknown  type  

 

Equilibrium  Market  Media  (Proposition  1)  

Two  cases:  

a) Captured  Media:  If  ! < !/!"  each  media  outlet  suppresses  its  information  in  exchange  for  a  bribe    !! = !".  

b) Independent  Media:  If  ! ≥ !/!"  each  media  outlet  reports  its  information  truthfully  (as  the  incumbent  cannot  afford  to  bribe  everyone).  

 

• With  respect  to    !/!":  The  maximum  available  audience  related  revenues  are  !  and  can  all  go  to  one  outlet  if  it  is  the  only  one  to  report  a  piece  of  informative  news.  The  incumbent  only  makes  offers  to  outlets  if  he  is  assured  that  he  can  silence  the  entire  media  and  can  only  have  such  assurance  if  he  offers  each  informed  outlet  !! > !.  This  transfer  will  cost  the  incumbent  !"  and  plays  a  key  role  in  whether  he  can  afford  to  silence  the  media.        

Turnover  and  Voter  Welfare  (Proposition  2)  

Turnover  of  politicians,  voter  welfare,  and  total  audience-­‐related  revenues  are  non-­‐decreasing  in  !, !  , !  and  !.  

• Note  that  we  can  rewrite  our  inequality  from  above  as  !"# < !  when  media  is  captured.  To  

obtain  an  independent  media,  we  can  increase  the  number  of  media  outlets  !,  the  difficulty  in  making  transfers  !,  and/or  the  commercialization  of  the  media  market  which  would  increase  !.  Alternatively,  we  could  decrease  the  rents  !  accessible  to  politicians.  

• Captured  media  do  not  identify  bad  politicians,  and  voters  have  no  ability  to  screen  good  from  bad  politicians.  When  indifferent,  our  voters  choose  the  incumbent,  and  thus  their  expected    

utility  (EVU)  is  !  from  the  first  round  and  !  from  the  second  round.  In  this  case,  our  turnover  rate  (probability  we  replace  a  challenger)  is  0  and  the  incumbent  stays.  

• Independent  media  will  identify  bad  politicians  and  our  new  turnover  rate  becomes  

 ! 1 − ! ≥ 0  

 

EVU  in  round  1  

! ! = ! ! ! + ! ! = ! ! !                                  

 = ! 1 + 1 − ! 0  

 = !  

                             !"#  in    round  2    

 ! ! = !,! ! ! + ! ! = !, ! ! ! + ! ! = !,! ! ! + ! ! = !, !! ! !                                  

= ! 1 + 1 − ! 1 − ! 0 + 1 − ! ! ! 1 + 1 − ! ! 1 − ! 0

= ! + ! 1 − ! !  

where  b’  is  a  challenger  

Total  EVU  or  Voter  welfare  is  higher  with  independent  media  2! + !(1 − !)!  as  is  the  turnover  

rate.  With  respect  to  the  effect  of  a  change  in  !  on  voter  welfare  and  the  rate  of  turnover  

(which  we  denote  as  !),  we  take  first  derivatives  and  find  

!! ! = 1 − ! !  >  0  

!! ! = 1 − ! > 0  

 

• Recall  that  we  normalized  the  audience  related  revenues  to  0  for  each  outlet  with  non-­‐

informative  news.  Let  !  be  the  sum  of  all  audience  related  revenues  so  with  non-­‐informative  

news  ! = 0  and  with  informative  news  ! = !".  

• To  increase  turnover,  voter  welfare,    audience  related  revenues  we  would  need  

o  greater  media  independence  (high  !)  to  decrease  chances  of  media  capture  

o media  commercialization  (high  !)  to  make  bribes  less  attractive  and  make  it  more  

expensive  for  politicians  to  capture  media    

o plurality  (high  !)  for  the  same  reasons  

o political  transparency  and  efficient  news  production  (high  !)  

 

 

   

 Empirical  Data  

 

Of  note  we  see  that  a  survey  of  these  88  countries  show  state  ownership  of  newspapers  is  associated  with  both  increased  tenure  of  the  chief  executive  and  corruption.  Likewise  high  concentration  of  

ownership  is  associated  with  lower  turnover  and  more  corruption.      

   

II.  Extensions  of  the  Baseline  Model    

A. Moral  Hazard    In  this  extension,  an  incumbent  chooses  how  much  rent  to  extract,  and  the  probability  he  is  caught  is  increasing  in  the  rent  consumed  as  well  as  media  activity.  The  media  can  directly  influence  rent  extraction;  however,  screening  good  candidates  from  bad  is  more  difficult.          The  rent  extracted  is  denoted  y∈ 0,1[ ].  The  remainder  goes  to  voters.  Politicians,  as  in  the  

baseline  model,  are  either  good  or  bad.    If  a  politician  is  good,  they  derive  no  benefit  from  rents  and  choose  y=0.    On  the  other  hand,  a  bad  politician  derives  a  linear  benefit  from  rent.    The  paper  assumes  that  politicians  will  only  serve  two  terms.    If  bad  politicians  make  it  to  a  second  term,  they  will  extract  y=1,  the  total  rent  available.  Bad  incumbents  have  no  reelection  motive  besides  the  possibility  of  rent  consumption  in  the  second  term.        The  probability  of  detection  given  y  is  denoted  Ψ y( )q  with  ′Ψ ≥ 0, ′′Ψ > 0,Ψ 0( )= 0, ′Ψ 0( )= 0,Ψ(1) = 1 ,  and lim

y→1′Ψ y( )= ∞ .  As  before,  q ∈ 0,1[ ],  but  

for  illustration  it  is  assumed  that  at  least  one  media  outlet  is  active  and  that  there  is  no  media  capture.        Good  incumbents  will  choose  y=0  both  terms,  and  bad  incumbents  appropriate  y=1  in  the  second  term.  So,  what  remains  is  to  derive  optimal  rent  extraction  of  bad  incumbents  during  the  first  term,  and  to  ensure  reelection.    

During  the  first  term,  given  q,  the  bad  incumbent  solvesmaxy y +1− Ψ y( )q{ }.    This  yields  an  optimal  rent  appropriation  level   y ,  which  satisfies ′Ψ y( )q = 1 ,  which  allows  us  to  show:    

   Meaning  that  greater  media  activism  reduces  the  rent  appropriated  by  politicians.  In  this  scenario,  political  turnover  is  given  by  

 p(q) =! (y(q))q(1!" ) .  

   Intuitively,  the  right  hand  side  is  the  probability  a  bad  politician  was  in  office  originally  multiplied  by  the  probability  the  bad  politician  gets  caught  extracting  rent.      There  will  be  two  competing  effects  on  turnover  as  q  increases.    With  a  fixed  y,  media  outlets  are  more  likely  to  detect  rent  extraction;  however,  this  increase  in  q  encourages  incumbents  to  reduce  rent  extraction.      This  makes  impact  of  active  media  on  turnover  ambiguous.      To  see  this  mathematically,  the  sign  of    

p '(q) = ! (y)+ !! (y)q dydq

"#$

%&'(1(" )  

   

  is  indeterminate  without  specific  functional  forms.          

Although  the  effect  on  turnover  is  ambiguous,  voter  welfare  is  unambiguously  increases  from  media  activism.    Expected  voter  welfare  is  given  by    

W (q) = 2! + (1!! )[1! y +" (y)q! ]  

 where  the  first  term  is  the  situation  where  a  good  incumbent  is  selected  in  the  first  term  and  returns  to  power  with  certainty.      The  second  term  is  the  situation  where  a  bad  incumbent  is  selected,  extracts  rent  in  the  first  period  but  is  caught  and  replaced  by  a  good  incumbent.        Notice  that:  

• The  sign  of  the  derivative  with  respect  to    q  is  unambiguously  positive.    

 

• Voters  may  want  bad  politicians  to  consume  some  positive  level  of  rent  because  rent  seeking  is  the  only  mechanism  for  screening  politicians.

 

• Equilibrium  rent  seeking  will  always  exceed  the  level  desired  by  voters,  meaning  greater  media  activism  is  valuable  on  the  margin  since:  

 § Voters’  marginal  benefit  from  rent  is  ! '(y)q" while  the  marginal  cost  is  

1.      § Incumbent  sets  ! '(y)q =1 .      As  a  result  the  marginal  cost  is  always  

greater  than  the  marginal  benefit.    

 The  argument  for  why  voter  welfare  is  increasing  in  q  also  implies  that  expected  rents  are  decreasing  in  q.    Expected  rents  can  be  written  as:  

R(q) = (1!! )[1+ y !" (y)q! ]  

.  

Notice  that:  

• This  expression  refers  to  total  rents  extracted  rather  than  those  extracted  by  a  particular  politician  

• Incumbents  always  choose  rent  levels  below  the  expected  rent-­‐maximizing  level  because  they  care  about  maximizing  their  own  rents  rather  than  the  total  rents  

extracted.    This  makes  incumbents  more  cautious  in  rent  seeking  than  rent  maximization  implies.  

• An  increase  in  q  will  lower  rent  extraction  through  the  discipline  effect  (politicians  are  

more  cautious  and  extract  less  rent)  and  a  screening  effect  (more  bad  politicians  are  

caught  and  removed).    

 

This  entire  discussion  summarizes  Proposition  3.  

 B. Endogenous  Media  Entry  

 This  scenario  is  the  same  as  the  baseline  case  except  that  the  number  of  media  outlets  is  endogenous.    There  are  a  large  number  of  potential  media  who  can  become  active  by  paying  a  fixed  cost  c.        This  adds  a  Step  0  to  the  baseline  game,  during  which,  potential  media  outlets  choose  whether  to  enter.    This  is  simultaneous  and  noncooperative.    The  outlets  that  have  paid  c  receive  an  informative  signal  with  probability  q.    Combining  Step  0  with  the  baseline  model  yields  Proposition  4:  

• Two  kinds  of  equilibria  in  media  market  o (a)  If  mod qa / c( )> r / τa ,  media  is  independent  and  number  of  outlets  is  

m = mod(qa / c)  o (b)  if  mod(qa / c) < r / τa ,  media  is  captured  and  number  of  outlets  is  

mod r / τa( )    Whether  or  not  media  is  free  is  determined  by  comparing   r / τa  (the  maximum  number  of  outlets  the  government  is  willing  to  pay  off)  and  qa / c (the  equilibrium  number  of  media  

entrants  if  media  is  independent).        We  can  see  that  the  higher  fixed  costs  (c),  the  greater  the  chance  that  there  will  be  media  capture.  So,  from  proposition  2,  it  is  obvious  that  greater  barriers  to  entry  reduce  political  turnover  and  voter  welfare.        

C. Endogenous  Monitoring    The  baseline  model  assumed  exogenous  information  gathering  technology  for  all  firms.  This  extension  alters  the  baseline  model  by  making  media  quality  -­‐  the  ability  of  outlets  to  detect  signals  –  dependent  on  investment  decisions.    

This  means  that  higher  resources  devoted  (such  as  talented  personnel,  sophisticated  

equipment,  insider  knowledge)  increase  the  success  of  a  journalistic  investigation.  Here,  media  will  be  differentiated  vertically  in  terms  of  quality  and  capture  will  depend  on  how  much  each  media  outlet  invests  in  monitoring.    

This  investment  will  cost  c(q),  where  c(.)  is  increasing,  convex,  and  twice  differentiable  and  q  is  

the  same  verifiable  signal  of  the  incumbents’  quality  as  in  the  baseline  model.  Investment  decisions  are  made  simultaneously  and  non-­‐cooperatively.    Detection  of  the  incumbent  here  also  depends  on  the  realization  of  the  variable  v  where  v  is  uniformly  distributed  between  [0,  1].  

There  is  verifiable  information  that  an  incumbent  is  bad  if  v  ≤  qi  

The  incumbent  will  capture  either  all  or  none  of  the  informed  media  outlets.  The  cost  of  buying  off  everyone  =  m*!*a,  where  m  is  the  number  of  informed  media  outlets.  The  incumbent  will  

bribe  everyone  if  r  ≥  m*!*a  

The  maximum  number  of  outlets  that  can  be  captured  (M)  =  mod  (!!!).  Nobody  is  captured  if  

informed  media  exceeds  M.  The  incumbent  bribes  only  if  v  >  qM+1  ,  where  v  is  the  minimum  necessary  effort  to  detect  an  incumbent’s  type.    Depending  on  how  v  is  realized,  there  are  3  possible  outcomes:  

i. v  >  q1     →   Nobody  is  informed  and  the  incumbent  gets  reelected  

ii. v  ≤  qM+1     →   The  number  of  informed  outlets  is  greater  than  the  number  of    outlets  the  incumbent  can  afford  to  buy  off,  so  the  incumbent  is    removed  from  office  

iii. qM+1  <  v  ≤  q1   →   The  informed  media  is  captured  and  incumbent  gets  reelected  

 

Equilibrium  choices  of  q  are  given  by  Lemma  5  

Let  M  =  mod(r/  !")  and  let  q(k)  be  the  unique  q  such  that  c’(q)  =  a/k.  In  equilibrium,  q1  =  …  =  qM  =  q  (1)  and,  for  every  i  ≥  M+1,  qi  =  q(i).  A  bad  incumbent  is  removed  from  office  with  probability  q(M+1).    

Media  outlets  invest  in  monitoring  up  to  a  point  where  the  marginal  cost  equals  the  marginal  

revenue.  Marginal  revenues  are  different  for  firms  depending  on  which  category  of  media  outlet  they  fall  into.  If  q  >  qM+1,  it  equals  a,  but  if  q  ≤  qM+1,  it  equals  a/i.  

Improved  media  efficiency  can  be  modeled  as  a  decrease  in  the  cost  of  investing  in  monitoring.    

C(q) =κC(q),  whereκ > 0 and    C(.)  has  the  same  properties  discussed  earlier.    κ  can  be  

interpreted  as  the  degree  of  transparency  in  the  operation  of  government.      

Voter  welfare  and  turnover  are  now  determined  by  the  probability  that  a  bad  incumbent  is  not  

reelected,   q(M +1) .    By  Lemma  5,   q is  implicitly  defined  by  

κ ′C (q) =a

modrτa

⎛⎝⎜

⎞⎠⎟ + 1

.  

This  indicates    C '(q(M +1))  is  nondecreasing  in  a  andτ ,  and  nonincreasing  in  !.    Thus,  an  increase  in  a  has  2  effects:  it  encourages  media  to  invest  more  in  monitoring,  and  it  increases  the  cost  for  the  incumbent  to  buy  off  the  media.    This  discussion  combined  with  the  fact  that  

′C (q)  is  increasing  in  q  leads  to  Proposition  6.  

Suppose  the  media  choose  their  monitoring  levels  endogenously.  Turnover  and  voter  welfare  are  nondecreasing  in  !  and  !,  and  non  increasing  in  !  

This  extension  lets  us  compare  two  seemingly  identical  countries  but  where  one  has  an  

institutional  environment  where  capture  is  more  likely  (lower  a  or  !  or  a  higher  !).  The  media  industry  in  this  country  will  be  less  differentiated  and  this  is  a  sign  of  media  freedom.  Examples  of  media  differentiation  from  the  US,  UK,  and  Italy  offer  support  to  this  conclusion.    

 D. Bribing  as  Access  

 

Apart  from  giving  bribes  and  introducing  favorable  legislation,  there  can  be  other  ways  of  

influencing  the  media  and  give  them  an  opportunity  to  raise  their  revenues.  For  example,  a  politician  could  give  an  exclusive  interview  to  a  media  outlet  that  is  ‘friendly’  to  him.    

So  if  the  government  cannot  make  direct  monetary  transfers  but  can  promise  interviews  (Ii)  to  specific  media  outlets  where  !!  is  between  0  and  1,  then  !!    =  1  means  that  the  interview  is  

granted  if  i  keeps  quiet  about  embarrassing  news.  !!  =  0  means  that  there  is  no  interview  granted.    

The  additional  profit  from  granting  interviews,  π  (m),  where  m  is  the  number  of  outlets  given  selective  interviews,  is  decreasing  in  m.  This  is  because  for  an  exclusive  interview,  commercial  

value  is  really  high  as  everybody  is  tuned  in  to  that  specific  channel  (or  buying  that  newspaper)  to  follow  the  interview.  

Proposition  7:  Suppose  that  the  government  bribes  the  media  by  offering  access  only  to  favored  media  outlets.  Then  the  media  industry  is  captured  if  and  only  if  π  (n)  >  a.    

This  means  that  the  only  case  in  which  media  could  be  silenced  is  if  profits  from  an  exclusive  

interview  exceed  what  the  media  outlet  could  earn  by  breaking  some  negative  news.  As  the  number  of  media  outlets  goes  up,  risk  of  capture  decreases.  With  media  diversity,  if  you  are  one  of  the  many  firms  airing  an  ‘exclusive’  interview,  you  would  rather  break  some  bad  news.          

   

Conclusions:      

• The  paper  gave  insights  into  the  political  economy  of  media  capture.  The  baseline  model  and  extensions  highlight  the  relationship  between  features  of  the  media,  media  independence,  and  political  outcomes.    

• In  particular,  the  discussion  made  clear  the  extra  dimensions  that  should  be  considered  when  regulating  the  media.  Above  and  beyond  standard  

competition,  it  is  important  to  consider  how  any  changes  affect  welfare  both  directly  (prices,  advertising  rates)  and  indirectly  through  political  accountability.  

• Media  capture  is  increasingly  possible  when  expected  rent  of  incumbent  is  high  enough  and  number  of  media  outlets  is  small.  So  media  plurality  is  an  important  factor  to  ensure  media  independence.  

•  Higher  transaction  costs  expressed  in  terms  of    time,  energy,  financial  means  and  reputation  lost    decreases  the  possibility  of  media  capture.  

• Policy  changes,  such  as  establishing  minimum  technical  qualifications  for  entering  media  and  changes  in  law  of  media  ownership,  may  have  an  affect  on  media  capture.  Any    policy  changes  should  be  evaluated  to  see  is  they  potentially  limit  the  number  of  media  outlets  and/or  lower  transaction  costs  (making  it  easier  for  government  to  make  transfers  to  the  media.  

• A  potential  innovation  in  the  media  industry  must  also  be  evaluated  on  the  basis  of  its  effect  on  the  ability  of  the  government  to  influence  news  production  to  its  advantage.  A  merger  between  two  big  media  firms,  privatization  of  state  media,  or  a  major  foreign  investment  in  local  media,  amongst  many  other  things,  could  have  serious  consequences  for  the  media-­‐voter-­‐government  relationship.    

• Future  research  may  build  upon  the  models  presented  by  relaxing  the  assumption  restricting  media  to  report  only  verifiable  information  

 

• Finally,  the  authors  note  that  media  bias  can  come  from  other  sources:  

• Reputational  concern  of  the  media  

• Confirmatory  cognitive  bias  

• Ideological  bias  of  reporters    and  an  increase  in  the  number  of  independent  media  may  actually  increase  the  level  of                                        bias  in  the  media.