…explore the potential effects of not only making cable tv a la carte, but also requiring that television content providers allow choice in how the consumer pays for the service – either an advertisement based system or a fee that would eliminate the commercials. Additionally, require that the consumers be given a choice of types of advertisements they would be exposed to (I could choose for example an advertisement-based model, but that I would not want to see ads for children’s toys or cereal, and that I wanted to see no political ads).
Here is my earlier post on a’la carte cable. The second question is, in effect, whether a cable company should be allowed to own TiVo and similar providers. Yes, and Grossman and Hart suggest such mergers can encourage joint investments with value specific to that relationship, in this case perhaps computer-TV linkages. By the way, the net effect of TiVo will be more shows with ads; if they add commercials to The Sopranos, the people who hate ads can take them out themselves.
Buying and selling specific ads? The people who want to zap children’s ads for sugar are precisely the homes the advertisers wish to reach; I’ll bet the Coasian equilibrium keeps the ads running but involves parental quotas on TV watching.
#08 in a series of 50.