Nonprofit Firms in the Performing Arts
The nonprofit performing arts have received substantial attention in the cultural economics literature, and represent an interesting application for many areas of economic inquiry. This chapter surveys the relevant theory and the most prominent empirical studies on performing arts nonprofits. The chapter begins with a description of the nonprofit sector - and the role of the performing arts in this sector - around the world. I then ask why performing arts nonprofits exist, taking into account the objectives of both consumers and suppliers of performing arts services. Next, I study the production and cost conditions that these firms face, paying particular attention to issues such as product quality, product cross-subsidization, and the so-called "cost disease". The issue of revenue sources and their generation follows, with a special emphasis on earned revenues, donations, and government subsidies. This discussion includes topics such as ticket pricing strategies, fundraising innovations, and the relationship between private giving and public funding. The chapter closes with suggestions for future research on the nonprofit performing arts.
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