A quota for the outsourcing of television programmes: an economic analysis of its effectiveness

A European Directive stipulates that at least 10% of programmes broadcast by each European broadcaster must be produced by an independent producer. By stimulating independent productions the European Union and the Dutch government aim to improve the quality of television programmes. In 1997, the Netherlands increased this requirement to 25%. This paper evaluates the policy, using a unique Dutch dataset that includes all independent productions appearing on public television from 1996 until 2000. We show that: (i) the producers are highly specialised; (ii) programming is volatile; (iii) entry of new firms is substantially reducing average rates of turnover; (iv) the producers who lobbied for the higher quota were losing market share and were relatively well‐organised. Therefore, the outsourcing requirement does not lead to the desired levels of stable production by individual producers and it is unlikely to be an effective instrument.