Market Provision of Public Goods: The Case of Broadcasting

Simon Anderson () and Stephen Coate ()

No 7513, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: D43 L13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mic and nep-pub
Date: Written
Note: PE
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