Thursday, October 29, 2009

Is online news really an inferior good?

What we have this week seems to reminding me of the concept of elasticity of demand and a question that "is online news an inferior good?".

Here's what I posted at the beginning of the semester:

We may raise questions regarding media products such as how the concept of elasticity of demand works when it comes to new media (e.g., online news media or other online services like blogs); and further, is media we are using normal good or inferior good? Dr. Chyi (forthcoming?) proposes a question, “is online news an inferior good?” and contends that online news is an inferior good based on a theoretical framework (normal vs. inferior goods) that “when income increases, the demand for an inferior good decreases; when income decreases, the demand for an inferior good increases, other things being equal”. It seems interesting that hypothesis was supported even after controlling for other media use (newspaper, television news, and radio news). Regarding this study, I’d like to talk more about why online news is an inferior good; what about other newly emerging media; and other possibilities regarding this.

As of other possibilities affecting the result that online news is an inferior good, we might think characteristics of market. In other words, whether online news is an inferior good or not may depend on the nature of markets. For example, to what extent people consume online news may differ in geographic characteristics of market (e.g., distance or market segment) and systems of market (regulatory system).

Now I'm kind of confused.
Is online news really an inferior good? It makes a perpect sense according to Dr. Chyi's article (in terms of theory adapted and method and analysis used).
However, then, is online news's quality really bad/lower compared to traditional forms/platforms news??
Assuming there's no significant difference of quality in between offline vs. online news, can we still say that online news is an inferior good?

Another thing is whether young people who are likely to get information on the Internet (including online news) are going to demand online news less when they get a job and their income increases?

1 comment:

  1. I guess whether a product is inferior or normal good has nothing to do with quality. It only depends on the way we consume it. If we buy less when we're richer, buy more when we're poor, then that's inferior. It's more like a behavioral description than value judgment. I don't think it has anything to do with quality. :)

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