IDEAS home Printed from https://ideas.repec.org/a/kea/keappr/ker-20141231-30-2-08.html
   My bibliography  Save this article

Regulation of Program Licensing Fee in Korean CATV Industry: Is it Welfare-Improving?

Author

Listed:
  • Yong-Jae Choi

    (Hankuk University of Foreign Studies)

Abstract

Financial difficulties of small program networks and poor program quality have led the Korea Communication Commission (KCC) to introduce a regulation mandating cable operators to pay at least 25% of their subscription revenues to cable networks. With this regulation, KCC intended to provide program networks incentives to deliver high quality programs and develop the cable TV industry. However, this regulation was introduced without a formal analysis of the optimality of market equilibrium or the effects of the regulation on the industry or social welfare. This paper sets up a simple model focusing on the two-sided market nature of CATV industry. It is shown that the market equilibrium is generally suboptimal and program quality is below the socially optimal level. When the market equilibrium is suboptimal, the regulation of the licensing fee can improve program quality and social welfare, but cannot achieve the socially optimal equilibrium.

Suggested Citation

  • Yong-Jae Choi, 2014. "Regulation of Program Licensing Fee in Korean CATV Industry: Is it Welfare-Improving?," Korean Economic Review, Korean Economic Association, vol. 30, pages 369-384.
    • Handle: RePEc:kea:keappr:ker-20141231-30-2-08
    as

    Download full text from publisher

    File URL: http://keapaper.kea.ne.kr/RePEc/kea/keappr/KER-20141231-30-2-08.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Economides, Nicholas & Tåg, Joacim, 2012. "Network neutrality on the Internet: A two-sided market analysis," Information Economics and Policy, Elsevier, vol. 24(2), pages 91-104.
    2. Simon P. Anderson & Stephen Coate, 2005. "Market Provision of Broadcasting: A Welfare Analysis," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 72(4), pages 947-972.
    3. Nicholas Economides & Benjamin E. Hermalin, 2012. "The economics of network neutrality," RAND Journal of Economics, RAND Corporation, vol. 43(4), pages 602-629, December.
    4. Esther Gal‐Or & Anthony Dukes, 2003. "Minimum Differentiation in Commercial Media Markets," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 12(3), pages 291-325, September.
    5. Robin S. Lee & Tim Wu, 2009. "Subsidizing Creativity through Network Design: Zero-Pricing and Net Neutrality," Journal of Economic Perspectives, American Economic Association, vol. 23(3), pages 61-76, Summer.
    6. Mark Armstrong Author-Email: mark.armstrong@ucl.ac.uk Author-Workplace-Name: University College of London, 2006. "Competition in Two-Sided Markets," RAND Journal of Economics, The RAND Corporation, vol. 37(3), pages 668-691, Autumn.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Anna D'Annunzio & Antonio Russo, 2013. "Network Neutrality, Access to Content and Online Advertising," DIAG Technical Reports 2013-09, Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza".
    2. D'Annunzio, Anna & Russo, Antonio, 2015. "Net Neutrality and internet fragmentation: The role of online advertising," International Journal of Industrial Organization, Elsevier, vol. 43(C), pages 30-47.
    3. Nicholas Economides, 2015. "Economic Features of the Internet and Network Neutrality," Working Papers 15-01, NET Institute.
    4. Njoroge Paul & Ozdaglar Asuman & Stier-Moses Nicolás E. & Weintraub Gabriel Y., 2014. "Investment in Two-Sided Markets and the Net Neutrality Debate," Review of Network Economics, De Gruyter, vol. 12(4), pages 355-402, February.
    5. Vogelsang Ingo, 2013. "The Endgame of Telecommunications Policy? A Survey," Review of Economics, De Gruyter, vol. 64(3), pages 193-270, December.
    6. Shane Greenstein & Martin Peitz & Tommaso Valletti, 2016. "Net Neutrality: A Fast Lane to Understanding the Trade-Offs," Journal of Economic Perspectives, American Economic Association, vol. 30(2), pages 127-150, Spring.
    7. Xiaoying Cheng & Lifeng Mu & Yanhong Sun & Yiwen Bian, 2018. "Optimal Pricing Decisions for the Online Video Platform Under Customer Choice," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 35(01), pages 1-21, February.
    8. Dietl, Helmut & Lang, Markus & Lin, Panlang, 2013. "Advertising pricing models in media markets: Lump-sum versus per-consumer charges," Information Economics and Policy, Elsevier, vol. 25(4), pages 257-271.
    9. Michelle Connolly & Clement Lee & Renhao Tan, 2017. "The Digital Divide and Other Economic Considerations for Network Neutrality," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 50(4), pages 537-554, June.
    10. Nielsen, Martin, 2015. "Strategic Investment Dependence and Net Neutrality," Discussion Papers on Economics 11/2015, University of Southern Denmark, Department of Economics.
    11. Claude Crampes & Carole Haritchabalet & Bruno Jullien, 2009. "Advertising, Competition And Entry In Media Industries," Journal of Industrial Economics, Wiley Blackwell, vol. 57(1), pages 7-31, March.
    12. Peitz, Martin & Schuett, Florian, 2016. "Net neutrality and inflation of traffic," International Journal of Industrial Organization, Elsevier, vol. 46(C), pages 16-62.
    13. D’Annunzio, Anna, 2017. "Vertical integration in the TV market: Exclusive provision and program quality," International Journal of Industrial Organization, Elsevier, vol. 53(C), pages 114-144.
    14. Jan Krämer & Lukas Wiewiorra, 2012. "Network Neutrality and Congestion Sensitive Content Providers: Implications for Content Variety, Broadband Investment, and Regulation," Information Systems Research, INFORMS, vol. 23(4), pages 1303-1321, December.
    15. Dewenter Ralf & Lüth Hendrik, 2015. "Eine alternative Definition von Suchneutralität / An alternative definition of search neutrality," ORDO. Jahrbuch für die Ordnung von Wirtschaft und Gesellschaft, De Gruyter, vol. 66(1), pages 221-242, January.
    16. Shin, Donghee, 2013. "Governing network neutrality: Public perception and policy capacity," 24th European Regional ITS Conference, Florence 2013 88540, International Telecommunications Society (ITS).
    17. Charles Angelucci & Julia Cagé & Michael Sinkinson, 2024. "Media Competition and News Diets," American Economic Journal: Microeconomics, American Economic Association, vol. 16(2), pages 62-102, May.
    18. Charles Angelucci & Julia Cagé, 2019. "Newspapers in Times of Low Advertising Revenues," American Economic Journal: Microeconomics, American Economic Association, vol. 11(3), pages 319-364, August.
    19. Peitz, Martin & Valletti, Tommaso M., 2008. "Content and advertising in the media: Pay-tv versus free-to-air," International Journal of Industrial Organization, Elsevier, vol. 26(4), pages 949-965, July.
    20. Timothy Brennan, 2017. "The Post-Internet Order Broadband Sector: Lessons from the Pre-Open Internet Order Experience," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 50(4), pages 469-486, June.

    More about this item

    Keywords

    CATV; Pprogram Licensing Fee; Program Quality; Two-sided Market;
    All these keywords.

    JEL classification:

    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kea:keappr:ker-20141231-30-2-08. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: KEA (email available below). General contact details of provider: https://edirc.repec.org/data/keaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.