A Dynamic Theory of Political Slant in News Media

News firms play an important role in the evolution of consumer beliefs. We analyze this role in a dynamic setting where consumer beliefs are endogenously determined by firms' strategic disclosure of news over time. In our model, news firms can manipulate naive consumer beliefs by choosing not to disclose news even when data exist. We show that the trajectory of consumer beliefs depends critically on structure in the market for news. We demonstrate that a profit-maximizing news monopolist has incentives to de-bias consumers. In contrast, competing news firms profit from some polarization and thus have incentives to create biased and polarized consumers, even when those consumers have initially unbiased beliefs. We use computational simulations to illustrate these belief dynamics.