25.11.05

FREE-RIDERS. Laura at Ace of Spades discovers the British radio tax, and that where there are taxes, there is tax evasion. The television signal is costly to produce, but use of it is nonrivalrous, and exclusion of viewers, once they have bought the receiver, is costly. In short, the Beeb is a classic example of a collective consumption good with a serious free-rider problem.

In the United Kingdom and other parts of the Commonwealth, owners of radio and television receivers must pay an annual receiver tax. In the United States, we have commercials. But with recording technologies, including Tivo, watchers can avoid the commercial tax by judicious use of the pause button (legacy VCR users know that one) or by fast-forwarding. The rating services and the advertisers have exactly no authority to compel people to pay that tax.

No comments: