Chapter 8: The economics of television: excludability, rivalry, and imperfect competition
Television is a part of everyday life and it is easy to overlook the complex economic factors and choices underpinning it. This chapter is designed to clarify those factors and choices by reviewing the fundamental elements of broadcasting economics, the economics behind different structural and financing choices, the economics of multichannel and pay television, how and why different forms of television are able to compete and coexist, and how digital switchover and convergence change, and might change, television economics. The fundamental questions of broadcasting economics involve how spectrum is allocated, who owns broadcasting, and how it is funded. The answers to these questions in different countries emerged from both economic rationales and technical, social, and political factors. The very nature of broadcasting requires governmental involvement: because it uses electromagnetic spectrum and spectrum is constrained, not all who might like to broadcast have been able to do so, thus fundamental policy decisions created the structure of television markets and also influenced their economic characteristics. Governments worldwide took different paths in creating television systems, usually following policy choices and trajectories they earlier created for radio. Some initially established television as a branch of government, some as public service television, and some as commercial television. In most countries the systems have evolved over time to create a mixture of state/public service and commercial television (or vice versa if they started with commercial broadcasting), with the size and wealth of countries greatly influencing the scale and scope of television services provided.
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