Pay Cable TV and the Programming Resource Allocation Problem

Introduction The case of broadcast television has long presented economists with a paradox: The broadcast television signal is in the nature of a privately‐provided public good, for which exclusion costs are presumably prohibitive and marginal costs are zero (i.e., once a television signal is broadcast, the owner of the transmitting apparatus cannot prevent any television viewer from simply turning on his TV set, at no cost, and receiving the signal). The conclusion which has followed is that broadcast television is optimally provided by the standards of Paretian efficiency, with p = mc = 0 (1).