Handbook of Media Economics, vol 1B

is easy to detect, the incumbent would have to pay off a large number of outlets, while if ν

becomes higher the number of media is smaller. In equilibrium there is a threshold

ν such

that the media is captured if and only if ν 

ν. Obviously, if ν is very high, no outlet

observes the signal and capture is not necessary.

With capture, vertical differentiation is reduced. The marginal revenue of the outlet

with the highest investment does not come from commercial sources but from govern-

ment transfers. As we saw in

Proposition 16.1, such revenue equals monopoly profit. But

now there can be more than one top outlet. In fact, in equilibrium there will