Market Provision of Public Goods: The Case of Broadcasting

51 Pages Posted: 7 Aug 2012

See all articles by Simon P. Anderson

Simon P. Anderson

University of Virginia - Department of Economics

Stephen Coate

Cornell University - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: January 2000

Abstract

This paper studies the market provision of a specific type of public good: radio and television broadcasts. Its main focus is to explore the ability of the market to provide broadcasting efficiently in a world in which broadcasters earn revenues by selling time to advertisers and advertisements provide information to consumers about new products. The paper shows that market provided broadcasts may feature too few or too many commercials, depending on the relative sizes of their social benefit and their nuisance cost to viewers. In addition, the market may provide too few or too many types of programs, depending on the relative size of viewing benefits and the benefits to advertisers from contacting viewers. The possibility of both under and over-provision of advertisements and programming, means that there are ranges of the parameters for which the market provides broadcasting close to efficiently. The paper also considers whether the market performs better under monopoly or competition and studies how the ability to charge viewers subscription prices impacts market performance.

Suggested Citation

Anderson, Simon P. and Coate, Stephen, Market Provision of Public Goods: The Case of Broadcasting (January 2000). NBER Working Paper No. w7513. Available at SSRN: https://ssrn.com/abstract=217909

Simon P. Anderson (Contact Author)

University of Virginia - Department of Economics ( email )

P.O. Box 400182
Charlottesville, VA 22904-4182
United States
804-924-3861 (Phone)
804-982-2904 (Fax)

Stephen Coate

Cornell University - Department of Economics ( email )

414 Uris Hall
Ithaca, NY 14853-7601
United States
607-255-1912 (Phone)
607-205-2818 (Fax)

National Bureau of Economic Research (NBER)

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