Question

Assume that each day ten thousand children watch sesame street on public television and that watching sesame street generates a benefit of $100 per child per year. once a year, public televisions hold a pledge drive asking viewers to make voluntary contributions in order to keep the programming available to everyone. suppose each parent has just one child who watches sesame street. each parent has a private incentive to contribute ______ during the pledge drive.

Answer 1

In the scenario in which each parent has just one child who watches sesame street, each parent has a private incentive to contribute 0% during the pledge drive. Public television is nonexcludable, which means that the free-rider problem will emerge, so every parent has an incentive to not contribute in hopes that others will. This is the reason for the 0%.