Handbook of Media Economics, vol 1B

separable in the first-copy cost of news coverage, ρ, and a per-copy distribution and

delivery cost, d. We will assume that it becomes increasingly costly to inform an increas-

ingly larger share of the voters, more precisely, that the cost is quadratic in ρ. The dis-

tribution cost is assumed to be linear in the number of copies sold, nx. The costs are

c ρ, xðÞ¼

1

2

ρ

2

+ dnx:

13.2.2.1.1 Monopoly Media

A monopoly newspaper chooses news coverage and output (price) so as to maximize the

expected profits,

max

x,ρ

p ρ, xðÞnx c ρ, xðÞ:

Assuming concavity, its maximum is characterized by the first-order conditions,

p

m

¼d + xg

1

xðÞ, (13.9)

ρ

m

¼nxT : (13.10)

The first ...