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

Cécile Aubert, Pranab Bardhan and Jeff Dayton-Johnson ()

Department of Economics, Working Paper Series from Department of Economics, Institute for Business and Economic Research, UC Berkeley

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 don’t know what we like, and we don’t 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.

Keywords: cultural goods; subsidy; externalities (search for similar items in EconPapers)
Date: 2003-11-23
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Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Artfilms, handicrafts and other cultural goods: the case for subsidy (2007)
Working Paper: Artfilms, Handicrafts and Other Cultural Goods: The Case for Subsidy (2004)
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