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Contracts Between Art and Commerce

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  • Richard E. Caves

Abstract

Contract structures used in the arts and entertainment industries are central to understanding their economic organization. The structures spring from common bedrock traits of these industries--pervasive product differentiation, all costs sunk, consumers' valuations unpredictable, artists having tastes for how creative work is done. Joint-venture structures are common, with revenue (not profit) shared. Advances to artists help bring incentive and distributive goals into consistency, as do long-term contracts covering successive cycles of the artist's output. Real option contracts allow the efficient allocation of decision rights in a project on which collaborators work successively.

Suggested Citation

  • Richard E. Caves, 2003. "Contracts Between Art and Commerce," Journal of Economic Perspectives, American Economic Association, vol. 17(2), pages 73-83, Spring.
    • Handle: RePEc:aea:jecper:v:17:y:2003:i:2:p:73-83
    Note: DOI: 10.1257/089533003765888430
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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/089533003765888430
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    References listed on IDEAS

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