Journal Article

Market Provision of Broadcasting: A Welfare Analysis

Simon P. Anderson and Stephen Coate

in The Review of Economic Studies

Published on behalf of Review of Economic Studies Ltd

Volume 72, issue 4, pages 947-972
Published in print October 2005 | ISSN: 0034-6527
Published online October 2005 | e-ISSN: 1467-937X | DOI: http://dx.doi.org/10.1111/0034-6527.00357
Market Provision of Broadcasting: A Welfare Analysis

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This paper presents a theory of the market provision of broadcasting and uses it to address the nature of market failure in the industry. Equilibrium advertising levels may be too low or too high, depending on the nuisance cost to viewers, the substitutability of programmes, and the expected benefits to advertisers from contacting viewers. The equilibrium amount of programming may also be below or above the socially optimal level. Perhaps surprisingly, the ability to price programming may reduce social surplus, while monopoly ownership may increase it.

Keywords: L82; M37

Journal Article.  14416 words.  Illustrated.

Subjects: Marketing ; Services

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