Handbook of Media Economics, vol 1B

supply-side incentives lead firms to distort their reports, competition tends to lessen bias

and improve welfare. When consumers themselves demand bias, competition may lead

to more extreme biases that cater to these tastes. This often improves welfare if consumers

are rational and information-seeking, but otherwise may not. When distortions originate

in firms’ incentives to build a reputation for quality, the availability of information from

competing sources may allow consumers to distinguish true quality more accurately and

so reduce bias by softening these reputational incentives.

ACKNOWLEDGMENTS

We thank David Str€omberg for valuable comments and suggestions.

REFERENCES

Adachi, T., Hizen, Y., 2014. Political accountability, electoral control