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Quality Investment and Price Formation in the Performing Arts Sector: A Spatial Analysis

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  • Traub, Stefan

Abstract

In this paper, we present a spatial model of the public provision of the performing arts. Agents behave boundedly rational. Art directors set performance quality according to their aspiration levels. While taking into account the spatial distribution of the population, administrative directors in calculating ticket prices ignore that they compete with neighboring performing arts organization (PAOs) for audience. The model is tested empirically using a spatial autoregressive (SAR) model with a complete data set of German PAOs and cities. Our data support the model and help to explain the size and distribution of losses in the public performing arts sector.

Suggested Citation

  • Traub, Stefan, 2005. "Quality Investment and Price Formation in the Performing Arts Sector: A Spatial Analysis," Economics Working Papers 2005-16, Christian-Albrechts-University of Kiel, Department of Economics.
    • Handle: RePEc:zbw:cauewp:3830
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    File URL: https://www.econstor.eu/bitstream/10419/22002/1/EWP-2005-16.pdf
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    References listed on IDEAS

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    1. Henry Hansmann, 1981. "Nonprofit Enterprise in the Performing Arts," Bell Journal of Economics, The RAND Corporation, vol. 12(2), pages 341-361, Autumn.
    2. Stefan Tobias, 2004. "Quality in the Performing Arts: Aggregating and Rationalizing Expert Opinion," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 28(2), pages 109-124, May.
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    7. Throsby, David, 1994. "The Production and Consumption of the Arts: A View of Cultural Economics," Journal of Economic Literature, American Economic Association, vol. 32(1), pages 1-29, March.
    8. Takahashi, Takaaki, 2004. "Spatial competition of governments in the investment on public facilities," Regional Science and Urban Economics, Elsevier, vol. 34(4), pages 455-488, July.
    9. Günther Schulze & Anselm Rose, 1998. "Public Orchestra Funding in Germany – An Empirical Investigation," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 22(4), pages 227-247, December.
    10. Hohaus, Bolko & Konrad, Kai A. & Thum, Marcel, 1994. "Too much conformity? : A hotelling model of local public goods supply," Economics Letters, Elsevier, vol. 44(3), pages 295-299.
    11. A. Michael Spence, 1975. "Monopoly, Quality, and Regulation," Bell Journal of Economics, The RAND Corporation, vol. 6(2), pages 417-429, Autumn.
    12. Blaug, Mark, 2001. "Where Are We Now on Cultural Economics?," Journal of Economic Surveys, Wiley Blackwell, vol. 15(2), pages 123-143, April.
    13. Bos, Dieter & Genser, Bernd & Holzmann, Robert, 1982. "On the Quality of Publicly Supplied Goods," Economica, London School of Economics and Political Science, vol. 49(195), pages 289-296, August.
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    Cited by:

    1. Kristien Werck & Bruno Heyndels & Benny Geys, 2008. "The impact of ‘central places’ on spatial spending patterns: evidence from Flemish local government cultural expenditures," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 32(1), pages 35-58, March.

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    More about this item

    Keywords

    Performing Arts; Local Public Goods; Quality; Spatial Competition; Bounded Rationality;
    All these keywords.

    JEL classification:

    • Z10 - Other Special Topics - - Cultural Economics - - - General
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • R59 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Other

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