Person:

Shleifer, Andrei

We examine the patterns of media ownership in 97 countries around the world. We find that almost universally the largest media firms are owned by the government or by private families. Government ownership is more pervasive in broadcasting than in the printed media. We then examine two theories of government ownership of the media: the public interest (Pigouvian) theory, according to which government ownership cures market failures, and the public choice theory, according to which government ownership undermines political and economic freedom. The data support the second theory.

In recent years, comparative economics experienced a revival, with a new focus on comparing capitalist economies. The transition from socialism, the Asian financial crisis, and the European economic and political integration, have challenged our understanding of how capitalist economies and societies work. Capitalist economies differ in important ways in how they regulate market activities, including the extent of public ownership, regulation of social harms and externalities, contract enforcement, modes of dispute resolution, etc. Capitalist countries also differ in how they regulate political competition, including the structure of electoral systems, the nature of checks and balances, legal procedures, and so on. These institutional differences among countries are both highly systematic, and have important consequences of economic and social outcomes. As an important example, the historical origin of a country’s legal system has proved to be a crucial factor shaping institutions. A growing body of theoretical and empirical research documents and analyzes how history as well as current conditions shape institutions. This research -- which we call the new comparative economics -- helps explain many differences in performance, and informs the design of economic and political reforms.