Download PaperWe consider consumers' sharing of media content online, such as their exchange of film and music over file sharing networks, and examine its long-term implications for cultural policy and cultural diversity. Because cultural goods convey national identity and values, governments have often intervened to increase the consumption of domestic content. We present a simple trade model suited for the media sector and introduce political preferences over cultural consumption to explain content quotas (or screen quotas), a common form of protectionism in the sector. We show that the advent of online sharing, which allows consumers to bypass commercial distribution channels to access media content, renders quotas ineffective. We analyze the implications of online sharing for cross-border commercialization and consumption of cultural goods, find that multilateral cooperation to eliminate quotas is desirable if online sharing cannot be blocked or severely punished, and argue that it creates a threat to cultural diversity.
