The economics of protection of cultural goods

Bekkali, Mukhtar
Major Professor
John C. Beghin
Committee Member
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Many countries claim that foreign cultural goods threaten their national identities and culture and engage in protectionism. In this dissertation, I analyze the economics of trade protection in cultural services, focusing on domestic cultural content protection in terrestrial television and radio broadcasting, and cultural tariffs in the movie industry. My the first essay considers the impact of cultural quota imposed of radio stations in increasing consumption of domestic programs. Domestic content requirement may reduce (increase) consumption of domestic programs when consumer's demand is highly elastic (inelastic), the degree of preference for foreign content over domestic content is high (low) and opportunity cost of listening time is high (low). The reduction occurs because the consumer reshuffles her consumption bundle towards leisure away from high domestic-content stations thereby reducing the overall aggregate consumption of broadcasting, and subsequently, the overall aggregate consumption of domestic programs. My second essay analyzes direct regulation of the proportion of the domestic programs in the total volume of broadcasting and tax-cum-subsidy policies. Marginal changes in content requirement increase (decrease) consumption of domestic shows when individuals are sensitive (insensitive) to the provided content. Tax-cum-subsidy polices have negative (no) effect on consumption of the domestic content when preferences of individuals of the country subject to regulation are highly sensitive (insensitive). Finally, we find that capping advertising increases consumption of domestic programs. The last essay addresses the question of whether a cultural tariff is a proper policy to raise consumption of domestic movies, especially artistic ones, as opposed to foreign blockbuster movies. "Hollywood" blockbuster movies allegedly have low-cultural value and cultural tariff intends to increase the average cultural level in the country implementing the policy. Starting from free trade, a small cultural tariff decreases the average blockbusterness of the domestic market as intended although the number of local producers willing to enter the blockbuster market increases and reduces the number of local producers specializing in the production of artistic movies. The cultural tariff introduces a distortion into the relative price of movies. Aggregate consumption of artistic movies that are locally made increases and so does the self-sufficiency ratio of local producers.