Measuring technical efficiency and marginal costs in the performing arts: the case of the municipal theatres of Warsaw

Víctor Fernández-Blanco, Ana Rodriguez-Alvarez and Aleksandra Wiśniewska
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Víctor Fernández-Blanco: University of Oviedo

Journal of Cultural Economics, 2019, vol. 43, issue 1, No 4, 97-119

Abstract: Abstract The aim of this paper is to bring new contributions to the analysis of efficiency and productivity in the performing arts. Firstly, we consider how the behaviour of a performing arts company can be analysed using multi-output production technology, given that these companies offer different products in terms of quantity and quality. Secondly, and to the best of our knowledge for the first time in the literature, we propose a procedure to measure the marginal costs associated with the production of performing arts firms. Moreover, this procedure can be applied to any other cultural sector successfully. To achieve our goals, we estimate a stochastic input distance function for a panel data set of 19 public municipal theatres in Warsaw over the period 2000–2012. Additionally, we calculate the technical efficiency indices for these theatres and characterize some determinants of their efficiency, paying special attention to the effect of public grants. Our findings suggest that, at the sample mean, these municipal theatres in Warsaw could have used 7% less inputs to achieve the same level of outputs. At the same time, the presence of public grants improves efficiency and, so, contributes to extending innovation and diversity. The marginal cost of a new performance is around 7149 PLN, and introducing a new title costs up to 3.33 times more than one which stages one title already established in the repertoire. And, as already highlighted in other researches, we also confirm the presence of the cost disease and the positive effect of public subsidies on efficiency and quality in the performing arts.

Keywords: Theatres; Multi-output technology; Marginal cost; Duality theory; Input distance function (search for similar items in EconPapers)
JEL-codes: D24 D70 L32 L82 Z11 Z18 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (5)

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Working Paper: Measuring Technical Efficiency and Marginal Costs in the Performing Arts: The Case of the Municipal Theatres of Warsaw (2017)
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DOI: 10.1007/s10824-018-9330-8

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