Handbook on the Economics of the Media

Handbook on the Economics of the Media

Edited by Robert G. Picard and Steve S. Wildman

This Handbook explores the economic features of the media and its infrastructure to provide readers with a sophisticated understanding of the critical issues and their influence on companies, audiences and regulators. The contributors explore and explain the impact of underlying factors such as multi-sided platforms, advertising and industry structure. They assess the unique economic factors affecting print, broadcast and broadband-based media, and highlight how the economics of the media can influence policy making. Each original chapter introduces the reader to a specific topic, reviews the literature on the development of knowledge in the field, explores critiques of the approach, and provides an understanding of applying this knowledge and the implications.

Chapter 3: Economics of trade in media products

Steven S. Wildman and Sang Yup Lee

Subjects: economics and finance, cultural economics, industrial economics, innovation and technology, technology and ict

Extract

Why include a chapter on trade in a book on media economics? The simplest answer is there is a literature to review. While it is not large, economists have been writing about trade in media products for over 25 years. But this begs the question of what makes it a subject worthy of serious investigation. Many thousands of goods and services are traded internationally, but relatively few have generated identifiable bodies of research. We argue below that our understanding of the economic forces that drive trade in various media products is far from complete and the challenges, both theoretical and empirical, that must be overcome to improve this understanding are of a type that is particularly interesting to economists. There is also the possibility that the conceptual advances required to improve our understanding of trade in media will have broader applications. For example, Rosse’s (1970) work on newspapers anticipated by over two decades key insights on pricing with interdependent demands now identified with the still relatively new literature on two-sided markets (or platforms). In their book on trade in computer software, Siwek and Furchtgott-Roth (1993) argue that domestic market size and scale advantages identified in early contributions by economists to the media trade literature (Waterman, 1988; Hoskins and Mirus, 1988; Wildman and Siwek, 1987, 1988) as critical to US producers’ success in the motion picture and television programme trades also help explain US firms’ success in the global software market.

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