Artfilms, Handicrafts and Other Cultural Goods: The Case for Subsidy

Cécile AUBERT (), Pranab K. Bardhan and Jeff Dayton-Johnson ()

Public Economics from EconWPA

Abstract: Though widespread, the practice of public subsidies for cultural activity lacks a rigorous and consistent economic rationale. We analyze a canonical market structure that characterizes much cultural activity: the competition of mass-produced goods with heterogeneous non- standardized goods that are imperfect substitutes. We analyze several types of market failure: uncertainty about preferences (we do not know what we like, and we do not know what we might like in the future); endogeneity of preferences (we like what our neighbors talk about, and we like what we're accustomed to); and externalities associated with production (future production costs are determined by current production). The model provides a basis for cultural subsidies to promote social welfare and economic development.

JEL-codes: H20 H42 L82 Z10 (search for similar items in EconPapers)
Date: 2004-07-02
Note: 32 pages, Acrobat .pdf
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwppe:0407001

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