nep-cul New Economics Papers
on Cultural Economics
Issue of 2016‒03‒06
three papers chosen by
Roberto Zanola
Università degli Studi del Piemonte Orientale

  1. Digitization, Copyright, and the Welfare Effects of Music Trade By Luis Aguiar; Joel Waldfogel
  2. Media and Politics By Strömberg, David
  3. Social Connections and Cultural Heterogeneity By WU, JIABIN

  1. By: Luis Aguiar (European Commission - JRC - IPTS); Joel Waldfogel (University of Minnesota - Carlson School of Management)
    Abstract: Since the launch of the iTunes Music Store in the US in 2003 and in much of Europe in the following years, music trade has shifted rapidly from physical to digital products, raising the availability of products in dierent countries. Despite substantial growth in availability, the available choice sets of digital music have not fully converged across countries. The territorial fragmentation of the EU copyright management regime and related cross-border transaction costs are often perceived as an obstacle to greater availability. However, other factors such as commercial strategies by music producers may also aect availability. EU policy makers are now contemplating various possibilities to reduce these cross-border trade costs and improve convergence in music availability across countries. This raises the question of how much benet these policy measures would create for consumers and producers in Europe and around the world. This study calculates the economic benets for consumers and producers from further trade opening or trade cost reductions in digital music. We address this question using comprehensive Nielsen data on digital track sales in the US, Canada, 13 EU Member States, and 2 other European countries (Norway and Switzerland) from 2006 to 2011. We estimate a structural model of music demand which allows us to obtain the consumer surplus for consumers in each destination country as well as the revenue for producers in each origin country. Our model allows us to simulate several scenarios. We rst compare the baseline current situation (the \status quo") with full autarky whereby only local music is available in each country - a big step backwards compared to the status quo. We then compare the status quo with a fully open EU Digital Single Market whereby all European music is available in all EU countries. Finally, we simulate worldwide openness in which all music is available in all countries. We estimate both consumer surplus benets and producer revenue eects for these scenarios. Not surprisingly, the current status quo music trade benets consumers everywhere compared to the autarky scenario. Relative to autarky, status quo trade raises aggregate consumer surplus in the 17 countries by about e300 million (a 11.3% increase). Trade also raises producer revenue by e85 million (a 2.8% increase). European consumers benet more from music trade than North Americans. However, it has large benets for American producers but on balance small benets to European producers. American producers have a larger market share in Europe that European producers have in the US. Moving from the current status quo to an EU Digital Single Market for music would increase consumer surplus from digital music consumption by 1.8 per cent (e19 million) and music producers'revenue by 1.1 per cent (e10 million). Benets vary considerably across Member States. Under worldwide frictionless trade consumers in 15 European countries gain e31 million (a 3% increase) while North American consumers gain e6.5 million (a 0.35% increase). Most of the gains from fully frictionless trade - about two thirds - are accomplished by a European single market. Annual gains from worldwide frictionless trade for producers, compared to autarky, reach 1.9% in Europe and 0.38% in the US. Clearly, the additional gains from moving beyond a European Digital Single Market to a worldwide open market would be small for European producers and consumers. Digital music production and consumption is only a small part of all media markets covered by copyright. We note that the gures presented here represent only a fraction of the potential benets from further trade opening in other digital media.
    Keywords: music, digitization, digital media, online markets, downloading, international trade,
    Date: 2014–11
  2. By: Strömberg, David
    Abstract: This article provides a review of recent literature in economics on the effect of mass media on politics. The focus is on the welfare effects of mass media. I also discuss the likely implications of existing behavioral theories of media effects, developed outside of economics.
    Keywords: bias; framing; media; policy; voting
    JEL: D03 D72 H5 L82
    Date: 2015–02
  3. By: WU, JIABIN
    Abstract: This paper proposes a cultural evolutionary model in which the assortativity level of matching is endogenously determined. We consider a population consisting of two cultural groups. Each group has a leader who can actively exert effort to enhance social connections among group members. Social connections increase the agents' probabilities of matching with one another among the same group in economic activities and thus increase the assortativity of matching in the population. We find that the endogenous process by which the assortativity level is determined can lead to cultural heterogeneity. While cultural homogeneity is the only prediction when the assortativity level is constant.
    Keywords: Cultural evolution, social connections, cultural heterogeneity, assortative matching, evolutionary game theory.
    JEL: C73 Z13
    Date: 2016–02–18

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