Essays on cultural economics

Abstract

This thesis consists of two essays on cultural economics: i) contracts between a content provider and asymmetric broadcasters and ii) vertical product differentiation considering consumers`` time costs. In the first essay, we suppose a monopolistic content provider and two asymmetric broadcasters, and adopt a two-stage dynamic game model and find subgame perfect Nash equilibrium though backward induction. It is shown that a monopolistic content provider should contract exclusively with the inferior broadcaster (whose own program or best alternative available has the lower audience rating) rather than the superior broadcaster (whose own program or best alternative available has the higher audience rating). However, its strategy of setting the broadcasting fee varies according to the popularity of its content. When the content is quite popular, the provider should adopt a "build-boats" strategy and threaten the inferior broadcaster with a potential exclusive contract with the superior broadcaster (by maintaining the chance to contract with the latter). When the content is not popular enough, it should adopt a “burn-boats” strategy and convince the inferior broadcaster of its exclusive contract (by abandoning the chance to contract with the superior broadcaster). That is, threatening by adopting the build-boats strategy is more effective if the content is popular, whereas convincing by adopting the burn-boats strategy is more effective if the content is not popular enough. This result explains why some parties rely on a legally enforceable agreement while others sign a memorandum of understanding (which is not enforceable). In the second essay, we will investigate how consumers`` time costs affect a monopolist``s product differentiation and prices in the movie/game industry. It is important to consider consumers`` time costs because consuming cultural goods such as movies and online games needs time a lot. It is shown that in the game industry, the ...