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Market Provision of Broadcasting: A Welfare Analysis

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  • Simon P. Anderson
  • Stephen Coate

Abstract

This paper presents a theory of the market provision of broadcasting and uses it to address the nature of market failure in the industry. Advertising levels may be too low or too high, depending on the nuisance cost to viewers, the substitutability of programs, and the expected benefits to advertisers from contacting viewers. Market provision may allocate too few or too many resources to programming and these resources may be used to produce programs of the wrong type. Monopoly ownership may produce higher social surplus than competitive ownership and the ability to price programming may reduce social surplus.

Suggested Citation

  • Simon P. Anderson & Stephen Coate, 2003. "Market Provision of Broadcasting: A Welfare Analysis," Virginia Economics Online Papers 358, University of Virginia, Department of Economics.
    • Handle: RePEc:vir:virpap:358
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    References listed on IDEAS

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    More about this item

    Keywords

    public goods; broadcasting; advertising; market failure; two-sided markets;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media

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