High-Definition TV

Coordination failures prevent Americans from enjoying high-definition TV. Consumers will buy high-definition TVs only if they can use them to watch high-definition TV shows. Unfortunately, it’s expensive for broadcasters to transmit high-definition signals, so they will only transmit when enough consumers have bought compatible TVs. When everyone waits for everyone else to start, however, not much happens.

The U.S. Congress tried to ensure the spread of high-definition TV by giving broadcasters the rights to billions of dollars of spectrum in return for the broadcasters promising to transmit high-definition signals. The broadcasters, however, used their political power to get out of the deal, so now they intend to use their spectrum mostly to send multiple low-definition signals rather than one high-definition transmission.