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 Prof. Ádám Szeidl

Central European University, Budapest, Hungary

Authors: Adam Szeidl and Ferenc Szucs

Abstract: We establish three results about favoritism in the Hungarian media. (1) We document distortive two-way favors between politicians and the media, in the form of government advertising and media coverage. For both directions of favors, our empirical strategy is to compare the allocations of actors with changing versus unchanging connection status. We interpret our findings as media capture. (2) We document an organizational change in favoritism: a first phase when favored media was controlled by a single connected investor; a second phase when this relation- ship broke down and two-way favors were terminated; and a third phase when control of newly favored media was divided between multiple connected investors. (3) We develop and implement a portable structural approach to measure the economic cost of misallocative favoritism.

JEL codes: D72, D73, L82, P16, D61

The seminar is co-financed by the European Union.

Full Text:  “Media Capture through Favor Exchange”