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Market for loyalties theory is based upon neoclassical economics. It describes why governments and power-holders monopolize radio, satellite, internet and other media through censoring regulations, technology and other controls. It has also been used to theorize about what happens when there is a loss of monopoly control.

The theory was originally developed in the 1990s by Monroe Price,[1] the Joseph and Sadie Danciger Professor Law, Media and Society at Cardozo Law School." bio His theory explains media regulation in terms of a market with an exchange, not of cash for goods or services, but identity for loyalty.

Economic Term Market for Loyalties
Sellers Governments & Powerholders
Buyers Citizens, Community Members
Price/Currency Loyalty
Goods Identity

Price describes sellers as: "Sellers in the market are all those for whom myths and dreams and history [i.e,. identity] can somehow be converted into power and wealth—classically states, governments, interest groups, business and others."[2] Price illustrates buyers, medium of exchange, and their relationship:

The "buyers" are citizens, subjects, nationals, consumers—recipients of packages of information, propaganda, advertisements, drama, and news propounded by the media. The consumer "pays" for one set of identities or another in several ways that, together, we call "loyalty" or "citizenship."

Payment, however, is not expressed in the ordinary coin of the realm: It includes not only compliance with tax obligations, but also obedience to laws, readiness to fight in armed services, or even continued residence within a country.[3]

Finally, the concept of identity was expounded upon by Paul Callister, Associate Professor of Law the University of Missouri - Kansas City School of Law:bio

That message [of identity] may consist of a party platform, ideology, or national ideals and aspirations. It may be as ephemeral as the hope for a better future or as concrete as the desire for a national homeland. Identity is valuable to buyers as it contains both the legacy of their past history and the promise of their dreams for the future (whether it is for wealth, a better life, or an education).[4]

The central idea is that governments and powerholders act in such a way as to preserve their control over the market. The theory was applied with respect to markets offering identity through various media--radio and satellite broadcasting and the internet.

In 2002 Callister, applied Market for Loyalties to understand what happens when there is a loss of monopoly control over the exchange of loyalty for identity.[5] Per the theory, a loss of monopoly control should result in a decline in loyalty (the price) down the demand curve to a point of equilibrium.

File:MFLunitary80.jpg

The magnitude of that drop in loyalty equates to the degree of instability caused by the opening of the market to competing suppliers of identity. In economic terms, the magnitude of the drop was predicated on the "elasticity" of the demand curve, which in turn depended on the presence of substitute goods ("identities"),[6] and presumably other competing "identities," if any.

Examples of substitute identities can be seen in the transition of Soviet Bloc countries to more open societies - rock and roll music, blue jeans, makeup and lipstick came to compete for traditional loyalties (service in the military, support for party leaders and policies, willingness to ignore inefficiencies and corruption, willingness to stay in the country, etc.). The presence of these substitutes increases elasticity reducing the effect of new competitors or suppliers of identities in the market for loyalties.

The relationship of instability (the drop in loyalty) to the elasticity of the demand curve is inverse and can be expressed:

\(i = f (k/p)\)

where "i" is the instability, "k" represents the level of new competing identities being introduced, and "p" is the penetration of previously competing identities, or their substitutes into the market. The implication of this relationship is as the number of competing identities or substitutes approaches infinity, the less the impact of one one additional competitor in the market on the loyalty (or price), and the more stable the market.

lim \(i (k/p) = 0\)
p→∞

This expression predicts that the more open a state's information environment is to begin with, the less affected it will be diminishing controls over information as a result of new technologies such as the internet. Other things being equal, the effect of internet on Singapore is less dramatic than North Korea (assuming its citizens were to gain access). Furthermore, the effect of a new Falun Gong (or neo-Nazi) web site on the U.S. is imperceptible, but the same site might be quite destabilizing in China.

Sometimes de-monopolization of an information environment can be a factor leading to disastrous consequences. Following the invasion in Iraq, strong tribal presences created "wholesale" and "retail" markets. Per economic theory, if wholesalers enter into "exclusive dealing" relationships, the effect is inelasticity, even when monopolistic forces have been removed.[7] Furthermore, the presence of new or "marginal" consumers (Kurds and Shíia) may foster new demand keeping loyalty (price) high).[8] Indeed, a whole new inelastic demand curve may result, with the prospective consequence that loyalty (price) is so high that suicide bombers may be recruited. Market for Loyalties Theory explains why great instability resulted in Iraq as censorship was removed from the information environment (although many other factors have be considered besides the information environment).

Under Market for Loyalties theory, an open market for loyalties (and information environment) is the most stable; the problem is how to move to such a market without destabilizing results from dramatic shifts in loyalty.

--Paul D. Callister (talk) 22:25, 10 June 2009 (UTC)


  1. ^ Monroe E. Price, Television: The Public Sphere and National Identity 67 (1995); Monroe E. Price, Law, Force and the Russian Media, 13 Cardozo Arts & Ent. L.J. 795 (1995); Monroe E. Price, The Market for Loyalties and the Uses of Comparative Media Law, in Broadcasting Reform in India: Media Law from A Global Perspective 93 (Monroe E. Price & Stefaan G. Verhulst Eds., 1998); Monroe E. Price, Media and Sovereignty: The Global Information Revolution and its Challenge to State Power 32 (2002); Monroe E. Price, The Market for Loyalties: Electronic Media and the Global Competition for Allegiances, 104 Yale L.J. 667 (1994); Monroe E. Price, The Market for Loyalties and the Uses of Comparative Media Law, 5 Cardozo J. Int’l & Comp. L. 445 (1997); Monroe E. Price, The Newness of New Technologies, 22 Cardozo L. Rev. 1885 (2001).
  2. ^ Monroe E. Price, Market for Loyalties: Electronic Media and the Global Competition for Allegiances, 104 Yale L.J., at 669.
  3. ^ Id., at 669-70.
  4. ^ Paul D. Callister, The Internet, Regulation and the Market for Loyalties: An Economic Analysis of Transborder Information Flow, 2002 J.L. Tech. & Pol'y 59, 83.
  5. ^ See generally, id.
  6. ^ Marco Fanno, The Elasticity of Demand of Substitute Goods, 3 Italian Econ. Papers 99, 115 (1998). See also, Marco Fanno, Die Elastizität der Nachfrage nach Ersatzgütern, in Zeitschrift für Nationalökonomie 51 (1930); Marco Fanno, Contributo alla Teoria Economica dei Beni Succedanei, in 2 Annali di Economia 331 (1925-26).
  7. ^ See Y. Joseph Lin, The Dampening-of-Competition Effect of Exclusive Dealing, 34 J. Indus. Econ. 209, 210 (1990); Paul D. Callister, Identity and Market for Loyalties Theories: The Case for Free Information Flow in Insurgent Iraq, 25 St. Louis U. Pub. L. Rev. 123, 140-45 (2006).
  8. ^ See Callister, supra note 7, at 139-140

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