Newspapers and public grants: A matter of quality

The present paper deals with the issue of newspaper subsidies in a framework of endogenous quality provision. We compare monopoly and duopoly cases in a vertically differentiated model. For monopolies we show that a per-copy subsidy reduces quality. Conversely, in duopolies in the vertically differentiated model, we show that a state subsidy might increase the quality of the low-quality newspaper and decrease the quality of the high-quality newspaper.