Entertainment without Borders: The Impact of Digital Technologies on Government Cultural Policy
Posted: 14 Jul 2008 Last revised: 2 Sep 2014
Date Written: July 11, 2008
Many countries limit the influences of foreign entertainment products such as music, film, and television programs to protect their cultural identify. Commonly observed policy tools include quotas, tariffs, and subsidies. However, advances in digital technology create new avenues, such as the Internet, for consumers to access foreign entertainment programs bypassing the government protection methods. This calls for a re-examination of the effectiveness of these traditional tools. We build a unified analytical framework to study the impact of digital technology on cultural protection policies. We find that the performances of these tools are greatly affected by the quality difference between domestic and foreign entertainment programs through the traditional channel and the Internet. We find that a tariff may be superior in creating a larger domestic social welfare. Moreover, the presence of leakage through the Internet reduces the effectiveness of a quota, while making a subsidy a more useful tool. We then further examine the presence of piracy on the effectiveness of these protection policies.
Keywords: cultural protection, digital entertainment, information leakage
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