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File: [View Document]
Author: Yoo, Christopher S.
Citation: Rethinking the Commitment to Free, Local Television, 52 EMORY L.J. 1579 (2003).
Date Published: 2003
Date Posted: 07/12/2006
Subjects: Labor Law
Law and Business
Law and Economics
Law and Regulatory Systems
Law, Technology and Communications
Keywords: Mass Media Law
Regulated Industries
Science and Technology
Antitrust
Communications Law
Electronic Commerce
Government Regulation
Law and Technology
Abstract:
Television policy has been viewed historically as posing an irreconcilable conflict between static and dynamic efficiency. Static efficiency requires that the price for television programming be set at marginal cost, which in the case of television programming is essentially zero. Dynamic efficiency dictates that the price be set high enough to allow the program to generate sufficient revenue to cover its fixed costs. Truly optimal (i.e., first-best) pricing was regarded as impossible, with any pricing decision necessarily reducing to a tradeoff between these two considerations. In this Article, Professor Yoo combines the insights of public good economics and monopolistic competition theory to advance a new approach to the regulation of television that brings these two seemingly contradictory forces into alignment. He then explores this framework by using it to evaluate one of the most longstanding and central commitments of U.S. television policy—the promotion and preservation of free, local television—which he argues is better viewed as being comprised of four subcommitments. Application of this framework reveals that these subcommitments have actually had the effect of impeding rather than promoting free, local television. Abandonment of these subcommitments would likely cause the quantity, quality, and diversity of television programming to increase. The analysis also shows how attempts to foster free, local television have induced secondary distortions in markets for other spectrum-based communications and has slowed the deployment of new technologies, such as third-generation wireless devices.