Working Paper: NBER ID: w7513
Authors: Simon P. Anderson; Stephen Coate
Abstract: This paper studies the market provision of a specific type of public good: radio and television broadcasts. Its main focus is to explore the ability of the market to provide broadcasting efficiently in a world in which broadcasters earn revenues by selling time to advertisers and advertisements provide information to consumers about new products. The paper shows that market provided broadcasts may feature too few or too many commercials, depending on the relative sizes of their social benefit and their nuisance cost to viewers. In addition, the market may provide too few or too many types of programs, depending on the relative size of viewing benefits and the benefits to advertisers from contacting viewers. The possibility of both under and over-provision of advertisements and programming, means that there are ranges of the parameters for which the market provides broadcasting close to efficiently. The paper also considers whether the market performs better under monopoly or competition and studies how the ability to charge viewers subscription prices impacts market performance.
Keywords: No keywords provided
JEL Codes: D43; L13; L82
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| advertisement quantity (M37) | viewer satisfaction (Y10) |
| program types (C88) | viewer satisfaction (Y10) |
| advertisement quantity (M37) | advertiser benefits (M37) |
| program types (C88) | advertiser benefits (M37) |
| social benefits (P36) | advertisement quantity (M37) |
| nuisance costs (Q52) | advertisement quantity (M37) |
| advertisement quantity (M37) | underprovision or overprovision of broadcasts (L32) |
| program types (C88) | underprovision or overprovision of broadcasts (L32) |
| viewer satisfaction (Y10) | efficiency of market-provided broadcasts (G14) |
| advertiser benefits (M37) | efficiency of market-provided broadcasts (G14) |
| market structure (D49) | efficiency of market-provided broadcasts (G14) |
| subscription fees (Z23) | efficiency of market-provided broadcasts (G14) |