The Economics of Domestic Cultural Content Protectionin Broadcasting

Many countries claim foreign cultural goods threaten their national identities and engage inprotectionism against foreign cultural goods with various policy interventions. We analyze theeconomics of domestic cultural content protection in terrestrial broadcasting, the mostwidespread policy instrument used in broadcasting. Using the love-of-variety approach, wemodel a representative consumer deriving utility from broadcasting services net of advertising,and allocating scarce time between consuming the various broadcasting services and leisure.Advertising is a nuisance; it costs time yet brings no utility. Broadcasting is a pure public good;broadcasters make profit in the monopolistic competition environment by bundling advertisingwith valuable cultural content. We impose a discrete domestic content requirement and theninvestigate the effects of its marginal changes on consumption of domestic broadcasting.Domestic content requirement may reduce (increase) consumption of domestic programs whenconsumer’s demand is highly elastic (inelastic), the degree of preference for foreign content overdomestic content is high (low) and opportunity cost of listening time is high (low). The reductionoccurs because the consumer reshuffles her consumption bundle towards leisure away from highdomestic-content stations thereby reducing the overall aggregate consumption of broadcasting,and subsequently, the overall aggregate consumption of domestic programs.[...]