whose arena int erest groups compete to influence public and private politics. In the 1950s nd 1960s t his role led comment ators to refer to the news media as the fourt h branch of government or the"fourth est ate The news media provides informat ion to the members of the public for their private and collective decisions, and in doing so it has considera ble discret ion in det ermi information is report ed. Moreover, it may have its own objectives based on self-int erest as well as on principles of journalism as embodied in the profession. The media thus can have a st rat egic role in influencing public sent iment and hence the out comes of private and public polit ics. The medias report ing also can affect the st rat egies of its sources, and it may conduct investigative journalism to uncover the concealment of information The st rat egic compet it ion considered here is bet ween int erest groups, an activist and indust ry, and pert ains to an externality associat ed wit h the consumption of a product The compet ition takes the form of communicat ing information about the seriousness of the externality to the public through the news media. The news media exercises discret ion on what it reports to the public, and based on that report, the members of the public individu ally decide whet her to consume the product and collectively decide whether to regulate th externality. The media's report ing strat egy thus can affect bot h private and public politics, and in equilibrium the media biases its news report to mitigate bot h a government failure and a market failure. Bias in this case can serve the interests of the public, even though individuals are fully rational and skept ical of the news report. In addition to providing information,the news media may be able to make normative argument s regarding the ex- ternality wit h the objective of changing the public's preferences. The change in behavior resulting from such moral suasion can be a subst itute for regulation II. An Example of an Issue and the Compet ition The issue of corporate average fuel economy(CAFE) standards for light vehicles pro- vides an example of a compet ition bet ween act iv s and firms wit h the news media provid ing information to the public for their private and collective decisions. The CaFE st andard for passenger cars has remained at 27.5 mpg since 1985, and the st andard for light trucks which includes SUVs, has remained at 20.7 mpg since a small increase in 1996. Environ- ment al activists and their allies in Congress have sought to increase the st andard. THwhose arena interest groups compete to influence public and private politics. In the 1950s and 1960s this role led commentators to refer to the news media as the fourth branch of government or the “fourth estate.” The news media provides information to the members of the public for their private and collective decisions, and in doing so it has considerable discretion in determining what information is reported. Moreover, it may have its own objectives based on self-interest as well as on principles of journalism as embodied in the profession. The media thus can have a strategic role in influencing public sentiment and hence the outcomes of private and public politics. The media’s reporting also can affect the strategies of its sources, and it may conduct investigative journalism to uncover the concealment of information. The strategic competition considered here is between interest groups, an activist and an industry, and pertains to an externality associated with the consumption of a product. The competition takes the form of communicating information about the seriousness of the externality to the public through the news media. The news media exercises discretion on what it reports to the public, and based on that report, the members of the public individu￾ally decide whether to consume the product and collectively decide whether to regulate the externality. The media’s reporting strategy thus can affect both private and public politics, and in equilibrium the media biases its news report to mitigate both a government failure and a market failure. Bias in this case can serve the interests of the public, even though individuals are fully rational and skeptical of the news report. In addition to providing information, the news media may be able to make normative arguments regarding the ex￾ternality with the objective of changing the public’s preferences. The change in behavior resulting from such moral suasion can be a substitute for regulation. II. An Example of an Issue and the Competition The issue of corporate average fuel economy (CAFE) standards for light vehicles pro￾vides an example of a competition between activists and firms with the news media provid￾ing information to the public for their private and collective decisions. The CAFE standard for passenger cars has remained at 27.5 mpg since 1985, and the standard for light trucks, which includes SUVs, has remained at 20.7 mpg since a small increase in 1996. Environ￾mental activists and their allies in Congress have sought to increase the standard. The 2