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Cultural quotas in broadcasting II: policy

  • Martin Richardson

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This paper considers the application of ‘cultural quotas’ to radio broadcasting: a requirement that a minimum percentage of broadcast content be of local origin. Using a Hotelling location model derived in Richardson (2004) we show that, while the laissez-faire solution involves less than (socially optimal) maximal differentiation, a quota reduces the differentiation between the stations even further. While a cultural quota may raise consumer welfare, the reduced station diversity and advertising levels monotonically lower overall social welfare. We consider two other policies – a limit on advertising and a publicly provided non-commercial station – and show that both also reduce diversity, compared to the laissez-faire solution. An advertising cap is not as effective as the quota in achieving greater airplay for local content for least welfare cost but a public station can be, depending on the magnitude of its associated fixed costs

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File URL: http://cbe.anu.edu.au/researchpapers/econ/wp443.pdf
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Paper provided by Australian National University, College of Business and Economics, School of Economics in its series ANU Working Papers in Economics and Econometrics with number 2004-443.

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Length: 27 pages
Date of creation: Jul 2004
Date of revision:
Handle: RePEc:acb:cbeeco:2004-443
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  1. Martin Richardson, 2004. "Cultural quotas in broadcasting I: a model," ANU Working Papers in Economics and Econometrics 2004-442, Australian National University, College of Business and Economics, School of Economics.
  2. Crampes, C. & Hollander, A., 1991. "Duopoly and Quality Standards," Cahiers de recherche 9128, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
  3. Francois, Patrick & van Ypersele, Tanguy, 2002. "On the protection of cultural goods," Journal of International Economics, Elsevier, vol. 56(2), pages 359-369, March.
  4. Keith Acheson & Christopher Maule, 1990. "Canadian Content Rules: A Time for Reconsideration," Canadian Public Policy, University of Toronto Press, vol. 16(3), pages 284-297, September.
  5. Claude Crampes & Abraham Hollander, 2008. "The regulation of audiovisual content: quotas and conflicting objectives," Journal of Regulatory Economics, Springer, vol. 34(3), pages 195-219, December.
  6. Martin J Osborne & Carolyn Pitchik, 1985. "Equilibrium in Hotelling's Model of Spatial Competition," Department of Economics Working Papers 1985-02, McMaster University.
  7. 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, 09.
  8. GABSZEWICZ, Jean J. & LAUSSEL, Didier & SONNAC, Nathalie, 2000. "TV-broadcasting competition and advertising," CORE Discussion Papers 2000006, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  9. repec:fth:inseep:9972 is not listed on IDEAS
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