DP7587 Markets and linguistic diversity

Author(s): Ramon Caminal
Publication Date: December 2009
Keyword(s): language, product variety, translation
JEL(s): D43, L13, L82
Programme Areas: Industrial Organization
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=7587

Producers of cultural goods and media products can only make their specific contents available to their audiences and readerships through a particular language. The choice of language is a trivial decision if consumers are monolingual. However, the fraction of bilingual consumers is high in some areas and rising everywhere because of the rapid expansion of English as a second language. In this paper I argue that, independently of the gains associated with the use of a lingua franca, the very existence of bilingual consumers may seriously bias market outcomes against minority languages. In particular, I show that the level of linguistic diversity determined by profit maximizing firms tends to be inefficiently low, except when and where the cost of producing a second linguistic version becomes sufficiently low. Thus, the model provides an efficiency argument supporting policies that protect minority languages in these markets.