We analyze the economics of domestic cultural content protection in terrestrial broadcasting, the most widespread policy instrument used in broadcasting. Using the love-of-variety approach, we model a representative consumer deriving utility from broadcasting services net of advertising,and allocating scarce time between consuming the various broadcasting services and leisure. Advertising is a nuisance; it costs time yet brings no utility. Broadcasting is a pure public good; broadcasters make profit in the monopolistic competition environment by bundling advertising with valuable cultural content. We impose a discrete domestic content requirement and then investigate the effects of its marginal changes on consumption of domestic broadcasting. Domestic content requirement may reduce (increase) consumption of domestic programs when consumer’s demand is highly elastic (inelastic), the degree of preference for foreign content over domestic content is high (low) and opportunity cost of listening time is high (low). The reduction occurs because the consumer reshuffles her consumption bundle towards leisure away from high domestic-content stations thereby reducing the overall aggregate consumption of broadcasting, and subsequently, the overall aggregate consumption of domestic programs.
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Paper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number
12476.
Length: 31 pages Date of creation: 17 Nov 2005 Date of revision: Handle: RePEc:isu:genres:12476
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References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Dixit, Avinash K, 1986.
"Comparative Statics for Oligopoly,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 27(1), pages 107-22, February.
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