Arjun Goyal - India
The people of the country require certain amenities for
living. These amenities have to be provided by the government of the nation.
Since these goods are used on a large scale, they have to be made free of cost
so that every person can use them, whether rich or poor. These goods are known
as public goods. Public goods are characterised by their non-rivalry and
non-excludability. This entails that one person’s use of the good will affect
the other person’s use of the good, and that no person can be excluded from
using this good, since it is so fundamental. Since these public goods have a
positive impact on the public (or third party), these goods have large positive
externalities.
Governments
have to provide these public goods free of cost because of their fundamental
nature and their widespread use. However, public goods have a common feature
with other private goods: cost. Public goods are produced at a particular cost,
and this has to be borne by the government. Unfortunately, the government has
to bear the cost of these goods fully. The funds for paying these costs come
from the taxes paid by the people of the country. However, many of the people
of the country do not actually pay their taxes.
This is
where the free rider problem arises. The free rider problem of public goods is
a cause of its property of being non-excludable. Since public goods are
non-excludable, people who do not pay their taxes are not excluded from using
these goods. This results in them being the ‘free rider’, subsequently resulting
in the cost to be borne by the other people who actually pay their taxes.
India is a
large country, with a teeming population, which is a little above one billion. The
government provides public goods to the population of the country on a large
scale. Since the production if these goods are on large scale, the free rider
problem is magnified, and more number of people starts to become free riders.
Thus, the funds of the government have to be redistributed to provide for all
the people although only some of them are paying for them. Thus, the government
has to start the process of prioritising. Free television channels are put on
the lower end of the priority list, with other matters like free drinking
water, electricity and roads on the upper end of the list. Thus, the channels
like Doordarshan and other news and entertainment channels have to find funding
methods of their own.
These
channels have started to allow advertisements to play on their channels in the
form of commercial breaks. Since these channels are widely viewed due to their
wide availability and free cost, advertisements are sometimes costly, and thus
the channel receives large amounts of funds. Doordarshan and many other public
channels have many hours of teleshopping advertisements to gain funds for
airing shows on the channel. All India Radio also has many advertisements in
between songs played, and it gains a lot of its funds from these sources. However,
the presence of commercial breaks reduces the quality of content that is played
on the channel. This might in turn reduce the number of viewers due to some
unhappy customers. However, advertisements are one of the most effective ways
of receiving funds for these kinds of public goods.
High quality production of shows makes
them more popular. If government channels make high quality shows, they can syndicate
them and sell them to other channels where they can be played. The advantage of
this is that not only will the show attract more viewers to the channel and
bring funds through the selling of the show, but it will also attract newer
audiences from the channel where the show is being played. Shows on Doordarshan
have been syndicated and sold to other channels. These shows now play on other
channels and gain funds and popularity for the channel. However, the costs for
producing these shows might be much more than what is gained from selling these
shows. Thus, they are not always profitable.
Word count: 681
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