Online Quality with Endogenous Organization

This paper investigates how supply-side factors influence the search for quality content in online and offline environments. We show that lower fixed costs of publication reduce the incentives to bundle content. In the... [ view full abstract ]

This paper investigates how supply-side factors influence the search for quality content in online and offline environments. We show that lower fixed costs of publication reduce the incentives to bundle content. In the presence of asymmetric information over quality, bundling of content by journalists  generates positive informational externalities for users. Journalists may group assortatively, better journalists having better partners. Then a consumer who discovers one quality journalist, has found several. The online environment reduces the pressure to group up, leading to fragmentation of journalism outlets. This can lower welfare in our baseline model.