I spoke earlier of the changes in the works at the ABC. Today, they have announced a number of changes in the services they will have on offer, including adding another channel and increasing the variety of programmes on offer. This sounds nice. After all, any free market economist will tell you that choice is good! However, markets work not just by offering you choices, but by rewarding producers who offer good choices and punishing producers who offer crappy choices, because after all, producing another option for you to choose among entails a cost. It's not the addition of more choices that drives markets to efficiency, it's the market process of entrepreneurs identifying an unmet demand that they can provide at a profit that drives markets to efficiency.
Sure, it's entirely possible that the new programming offered by the ABC could potentially earn a profit, and thus be efficient. It could be that there is an unmet demand for televised Australian ballet and opera, and the ABC is the entrepreneur that the market needs to provide this content. Or it could be that it simply is not worth the cost. My money is on the latter, and that we'll see the subsidy to the ABC rise as a result.
Sure, it's entirely possible that the new programming offered by the ABC could potentially earn a profit, and thus be efficient. It could be that there is an unmet demand for televised Australian ballet and opera, and the ABC is the entrepreneur that the market needs to provide this content. Or it could be that it simply is not worth the cost. My money is on the latter, and that we'll see the subsidy to the ABC rise as a result.
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