Markets and linguistic diversity

Resum

The choice of language is a crucial decision for firms competing in cultural goods and media markets with a bilingual or multilingual consumer base. Insofar as multilingual consumers have preferences regarding the intrinsic characteristics (content) as well as the language of the product, we can examine the efficiency of market outcomes in terms of linguistic diversity. In this paper, I extend the spokes model and introduce language as an additional dimension of product differentiation. I show that: (i) if firms supply their product in a single language (the adoption model), then the degree of linguistic diversity is inefficiently low and (ii) if some firms supply more than one linguistic version (the translation model), then in principle the market outcome may exhibit insufficient or excessive linguistic diversity. However, excessive diversity is associated with markets where the share of products in the minority language is disproportionately high with respect to the relative size of the linguistic minority.