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Optimal pricing and grant policies for museums

  • Juan Prieto-Rodríguez


  • Víctor Fernández-Blanco

The “free access” policy designed by the British Government has encouraged interest in museum financial issues. We define a principal-agent model for museum administration where there are two income sources: public grants and ticket revenues. This model allows us to define the optimal contract determining public grants, ticket prices, budget and managerial effort. We find a theoretical explanation for the inelastic pricing strategy commonly adopted in cultural economics. We further find that museum manager should never have any control over the price of tickets. The model can also be applied to other institutions, such as schools or NGOs, which are able to raise funds directly from private (e.g., ticket revenues or membership fees) or public sources. Copyright Springer Science+Business Media, B.V. 2006

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Article provided by Springer in its journal Journal of Cultural Economics.

Volume (Year): 30 (2006)
Issue (Month): 3 (December)
Pages: 169-181

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Handle: RePEc:kap:jculte:v:30:y:2006:i:3:p:169-181
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  1. Guesnerie, Roger & Laffont, Jean-Jacques, 1984. "A complete solution to a class of principal-agent problems with an application to the control of a self-managed firm," Journal of Public Economics, Elsevier, vol. 25(3), pages 329-369, December.
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  14. Juan Gabriel Rodríguez & Rafael Salas, 2004. "A Bistochastic Nonparametric Estimator," Economic Working Papers at Centro de Estudios Andaluces E2004/22, Centro de Estudios Andaluces.
  15. Juan Prieto-Rodríguez & Víctor Fernández-Blanco, 2006. "Optimal pricing and grant policies for museums," Journal of Cultural Economics, Springer, vol. 30(3), pages 169-181, December.
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