Commercial Broadcasting and Local Content: Cultural Quotas, Advertising and Public Stations

Abstract

This article considers two radio stations choosing combinations of local and international content to broadcast to consumers with preferences over those combinations. Station revenue derives from sales of advertising time, the demand for which depends negatively on its price and positively on the station's market share and consumers get disutility from advertising. This article derives the laissezfaire solution to this model and considers the consequences of a local content quota, an advertising cap and a non-commercial public station for broadcasting diversity and welfare with and without an externality attached to local content.