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Economics of Governance

Erschienen in:

07.12.2016 | Original Paper

Determinants of Public Service Broadcasting Size

verfasst von: Saori Ihara, Yukihiro Yazaki

Erschienen in: Economics of Governance | Ausgabe 2/2017

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Abstract

We investigate the issue of whose interest is reflected in selecting the size of public service broadcasting (PSB). We examine two different approaches: (1) the public interest theory, where PSB size is selected to maximise citizens’ welfare and (2) the public choice theory, where PSB size is determined by self-interested politicians. Based on the foundations of these two views, we derive theoretical predictions about how PSB size changes with an increase in political competition. Then, we test these predictions using panel data from OECD countries over the period 1993–2010, and we find that the degree of electoral competition is negatively associated with PSB size. We conclude that PSB size does not reflect the public interest theory, but rather upholds the public choice theory, especially the politicians’ rent-seeking motive.

Vorheriger Artikel Economic freedom and public, non-market institutions: evidence from criminal prosecution

Nächster Artikel Within-group heterogeneity and civil war

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Previous studies theoretically unravel and empirically find the effect of media on political accountability. Prat and Strömberg (2013) and Strömberg (2015) provide a detailed survey on this subject.

PSB stations’ revenues usually include public funds (mainly, licence fees and government grants) and commercial revenues (mainly, advertising and sales).

Our model shows that politicians also have a re-election motive, which is dominated by the rent-seeking motive. See Sect. 2.3.

We can introduce other information sources through which the voter can receive information (e.g. commercial broadcasters and newspapers). This extension does not change our theoretical prediction.

In our model, public goods’ level g is chosen by the self-interested incumbent. This is because we aim at modelling a situation where the level of public goods provided by the incumbent (reflecting the degree of political accountability) is increased or reduced with the change in the degree of PSB’s information provision. Then, we examine the optimal degree of PSB size for the voter and for the incumbent, taking the political-accountability effect of PSB into account.

Some countries use government grants and/or advertising as other revenue sources for PSB. Our theoretical analysis can be applied to such countries because governments can change PSB stations’ total revenue by changing the amount of public funds.

Rival broadcasters also prevent the government from censoring PSB programmes. When other broadcasters recognise government censorship, they critically report it to gain viewership. This type of political news would damage the government’s reputation.

We also assume that \(\lim \limits _{s\rightarrow 0}p'(s)=\infty \), \(\lim \limits _{s\rightarrow \infty }p'(s)=0\) and \(\lim \limits _{s\rightarrow 0}p(s)p'(s)<\infty \) to ensure an interior solution.

Even if the voter was uninformed of g at the time of election, he observes the level of g finally. Here, we have implicitly assumed a time lag between production and consumption of public goods.

We later show that the value of T does not affect the equilibrium. However, we introduce it for clarifying the monetary rents. In addition, the exogenous budget T can be collected using a lump-sum tax from voters. However, introducing a lump-sum tax T does not change the equilibrium outcomes at all. For simplification, we do not discuss the way of collecting T .

See Persson and Tabellini (2000) for a detailed explanation of a basic probabilistic voting model. Following Svaleryd and Vlachos (2009), we use a simple one-period retrospective voting model. However, we can also use a two-period model, as in Prat and Strömberg (2005), without changing our theoretical predictions. Our model is simple enough to derive the theoretical predictions.

The uninformed voter can rationally deduce the ‘equilibrium’ level \(g^*(s)\) of public goods, using information about s. However, he cannot observe the actual level of public goods, and thus, cannot evaluate the incumbent with respect to the actual level of public goods.

Note that we can also derive Eq. (1) and Lemma 1 even when we use a model of heterogeneous citizens (p(s) citizens become informed and \(1-p(s)\) citizens remain uninformed) instead of a representative citizen. In this extended model, all citizens can be better off if uninformed citizens abstain from voting. This is because citizens obtain a higher level of public goods in this situation.

Svaleryd and Vlachos (2009) also show the result of this lemma and empirically find the validity of the result. However, they do not consider a relation between media and political competition, which is the subject of our paper.

Notice that from the implicit function theorem, we have \(\frac{\partial s^C}{\partial \delta }=-\frac{\partial ^2W^*/ \partial \delta \partial s}{\partial ^2 W^*/ \partial s^2}\) evaluated at \(s=s^C\). Furthermore, from the second-order condition, the denominator is negative.

We refer to Beck et al. (2001) to identify countries with a parliamentary system.

Some countries have several public TV and radio broadcasters. Then, we combine the revenues of all public broadcasters.

Available at http://about.abc.net.au/how-the-abc-is-run/reports-and-publications/ for the Australian Broadcasting Corporation, http://www.sbs.com.au/aboutus/corporate/view/id/111/h/Annual-Reports for the Special Broadcasting Service in Australia and https://www.nhk.or.jp/pr/keiei/gyoumu/h24/index.htm for the Japan Broadcasting Corporation.

Concerning a two-party system, the literature also uses the incumbent’s electoral margin of victory, defined as one minus the absolute value between the incumbent’s vote or seat share and a half (e.g. Case 2001; Besley et al. 2010). Our first variable is a counterpart to this. However, our variable is more suitable to our sample countries characterised by a parliamentary system where several parties compete for election and ruling parties may form a coalition government.

HHI is used, for example, by Bjørnskov et al. (2007), Potrafke (2010) and De Paola and Scoppa (2011).

The largest public broadcasters in Australia, Denmark, Finland, Japan, Norway, Spain (after 2010), Sweden and the UK ban advertising.

Australia, Hungary (after 2002), Iceland (after 2007), Netherland (after 2000), Portugal (before 2002) and Spain impose no licence fees and their PSB stations receive government grants.

A classification of governments’ ideology depends on coding methods. Thus, as a robustness check, we have also used the index of left-wing governments provided by Armingeon et al. (2015), instead of the left-wing dummy from Beck et al. (2001). However, we found results similar to those reported in Tables 2, 3, 4, 5 and 6.

We use central government debt rather than general government debt due to availability of data.

The polity2 score for Iceland is not available. Thus, the number of countries in this case is 22. When we add Iceland as a stable democracy in our sample, we obtain estimation results similar to those reported in Table 4. The countries categorised as newly established democracies are the Czech Republic, Hungary, Slovakia and Slovenia.

Based on this definition, countries with less media freedom are Hungary, Italy, Slovakia and Slovenia.

However, the estimated coefficients on the interaction term in column (3) and (4) are positive, although small and not statistically significant. Thus, a further examination about this relation may be needed.

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Titel: Determinants of Public Service Broadcasting Size
verfasst von: Saori Ihara
Yukihiro Yazaki
Publikationsdatum: 07.12.2016
Verlag: Springer Berlin Heidelberg
Erschienen in: Economics of Governance / Ausgabe 2/2017
Print ISSN: 1435-6104
Elektronische ISSN: 1435-8131
DOI: https://doi.org/10.1007/s10101-016-0188-y