Artfilms, Handicrafts and Other Cultural Goods: The Case for Subsidy
AbstractThough widespread, the practice of public subsidies for cultural activity lacks a rigorous and consistent economic rationale. We analyze a canonical market structure that characterizes much cultural activity: the competition of mass-produced goods with heterogeneous non-standardized goods that are imperfect substitutes. We analyze several types of market failure: uncertainty about preferences (we donâ€™t know what we like, and we donâ€™t know what we might like in the future); endogeneity of preferences (we like what our neighbors talk about, and we like what weâ€™re accustomed to); and externalities associated with production (future production costs are determined by current production). The model provides a basis for cultural subsidies to promote social welfare and economic development.
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Bibliographic InfoPaper provided by Department of Economics, Institute for Business and Economic Research, UC Berkeley in its series Department of Economics, Working Paper Series with number qt62n4f3bh.
Date of creation: 23 Nov 2003
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cultural goods; subsidy; externalities;
Other versions of this item:
- Cecile Aubert & Pranab K. Bardhan & Jeff Dayton-Johnson, 2004. "Artfilms, Handicrafts and Other Cultural Goods: The Case for Subsidy," Public Economics 0407001, EconWPA.
- H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
- H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
- L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
- Z10 - Other Special Topics - - Cultural Economics - - - General
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