Public radio in the United States: does it correct market failure or cannibalize commercial stations?

^{a b} Steven T. Berry
^{b c} Joel Waldfogel

^a , Yale University, New Haven, CT, USA
^b , NBER, 1050 Massachusetts Avenue, Cambridge, MA 02138, USA
^c , The Wharton School, Philadelphia, PA 19104-6372, USA

Received 1 May 1997; Revised 1 April 1998

Abstract

Because broadcasters can capture only part of the value of their product as revenue, there is the potential for a classic problem of underprovision. Whether public support corrects a market failure depends on whether the market would have provided similar services in the absence of public broadcasting. We address these questions by asking whether public and commercial classical stations compete for listening share and revenue as well as whether public stations crowd out commercial stations. We find evidence that public broadcasting crowds out commercial programming in large markets, particularly in classical music and to a lesser extent in jazz.

Keyword(s): Crowding out; Entry; Market failure; Public goods; Public radio

JEL Classification: H41; L33; L82