Public goods and their importance to the society

Meahak Sippy

Country: Japan

A product that one individual can consume without reducing its availability to another individual and from which no one is excluded. Economists refer to public goods(Quasi) as "non-rivalrous" and "non-excludable". (Non-excludability - the goods cannot be confined to those who have paid for it. Non-rivalry in consumption - the consumption of one individual does not reduce the availability of goods to others.) An environmental public good is public open space, which nobody would provide on their own, even though everybody benefits from it being available. Street lighting is another example of a public good. No person can be excluded from using this good, since it is their fundamental right.

         National defense, sewer systems, public parks and basic television and radio broadcasts could all be considered public goods. One problem with public goods is the free-rider problem. This problem says that a rational person will not contribute to the provision of a public good because he does not need to contribute in order to benefit. This results in either an under-provision of public goods or in an overuse of a common access resource. Public goods also have a positive effect on the third party, therefore they have large positive externality.

               A positive externality (also called "external benefit" or "external economy" or "beneficial externality") is an economic activity that imposes a positive effect on an unrelated third party. Similar to a negative externality, it can arise either on the production side, or on the consumption side. For example, the construction and operation of an airport. This will benefit local businesses, because of the increased accessibility.

                Public broadcasting includes radio, television and other electronic media outlets whose primary mission is public service. Public broadcasters receive funding from diverse sources including license fees, individual contributions, public financing, and commercial financing.

Public broadcasters do not rely on advertising to the same degree as commercial broadcasters, or at all; this allows public broadcasters to transmit programmes that are not commercially viable to the mass market, such as public affairs shows, radio and television documentaries, and educational programmes. One of the principles of public broadcasting is to provide coverage of interests for which there are missing or small markets. Public broadcasting attempts to supply topics of social benefit that are otherwise not be broadcast by commercial broadcasters. Typically, such underprovision is argued to exist when the benefits to viewers are relatively high in comparison to the benefits to advertisers from contacting viewers. 

            In Japan, the main public broadcaster is the NHK (Japan Broadcasting Corporation). NHK is an independent corporation chartered by the Japanese Broadcasting Act and primarily funded by license fees. NHK World broadcasting (for overseas viewers/listeners) is funded by the Japanese government. NHK is an independent corporation chartered by the Japanese Broadcasting Act and primarily funded by license fees. 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.NHK offers local, national, and world news reports. Under the Broadcast Act, NHK is under the obligation to broadcast early warning emergency reporting in times of natural disasters such as earthquakes and tsunamis. Their national network of seismometers in cooperation with the Japan Meteorological Agency makes NHK capable of delivering the news in just 2–3 minutes after the quake. They also broadcast air attack warnings in the event of war, using the J-Alert system. All warnings are broadcast in five languages: English, Mandarin, Korean and Portuguese (Japan has small Chinese, Korean and Brazilian populations), as well as Japanese. The warnings were broadcast in these languages during the 11 March 2011 earthquake and tsunami. NHK has also been an innovator in television, developing the world's first high definition television technology in 1964 and launching high definition services in Japan in 1981.

Shows on TV Tokyo Network (TXN) have been profitable, but the costs for producing these shows might be much more than what is gained. It also creates a larger tax burden on people making it less profitable.

References ;

1)   http://www.montclair.edu/finance-and-treasury/university-controller/grant-accounting/cost-considerations/

2)    "Public Broadcasting - Why, How?". UNESCO & World Radio and Television Council. Retrieved 17 August 2011.

3)   Simon P. Anderson and Stephen Coate, "Market Provision of Public Goods: The Case of Broadcasting", National Bureau of Economic Research, January 2000.

4)   Cambridge Economics for the IB Diploma Second Edition- Ellie Tragakes