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ThispageintentionallyleftblankTheEconomicsofArtandCultureThisisthefirstbooktocovernotonlytheeconomicsofthefineartsandperformingarts,butalsopublicpolicytowardtheartsatfederal,state,andlocallevelsintheUnitedStates.Thesecondeditionoffersgreatercoverageoftheinterna-tionalartssector.Theworkwillinterestacademicreadersseekingacoretextontheeconomicsoftheartsandartsman-agementorasupplementarytextonthesociologyofthearts,aswellasgeneralreadersseekingasystematicanalysisofthearts.Theoreticalconceptsaredevelopedfromscratchsothatreaderswithnobackgroundineconomicscanfollowtheargument.Theauthorslookatthearts’historicalgrowthandthenexamineconsumptionandproductionoftheliveperform-ingartsandthefinearts,thefunctioningofartsmarkets,thefinancialproblemsofperformingartscompaniesandmuseums,andthekeyroleofpublicpolicy.AfinalchapterspeculatesaboutthefutureofartandcultureintheUnitedStates.JamesHeilbrunisProfessorEmeritusofEconomicsatFordhamUniversity.HehasbeenaconsultanttotheNationalEndowmentfortheArtsandistheauthorofUrbanEconomicsandPublicPolicy(1987)andRealEstateTaxesandUrbanHousing(1966).CharlesM.GrayisProfessorofEconomicsintheGraduateSchoolofBusinessattheUniversityofSaintThomas,Minneapolis,Minnesota.Heisanonprofitmanagementcon-sultantandtheeditorofTheCostsofCrime(1979),andhehaswrittenonvariousaspectsoftheeconomicsofthearts.TheEconomicsofArtandCultureSecondEditionJAMESHEILBRUNFordhamUniversityCHARLESM.GRAYUniversityofSaintThomasThePittBuilding,TrumpingtonStreet,Cambridge,UnitedKingdomTheEdinburghBuilding,CambridgeCB22RU,UK40West20thStreet,NewYork,NY10011-4211,USA477WilliamstownRoad,PortMelbourne,VIC3207,AustraliaRuizdeAlarcón13,28014Madrid,SpainDockHouse,TheWaterfront,CapeTown8001,SouthAfrica(netLibrary)©ContentsListoffiguresandtablespageviiPrefacexiPartI:Theartssector:Size,growth,andaudiences1Anoverviewoftheartssector32Growthoftheartssector133Audiencesforthearts40PartII:Themicroeconomicsofdemandandsupply4Consumerdemand:Anintroduction615Thecharacteristicsofartsdemandandtheirpolicyimplications856Productionintheperformingarts1077Firmsandmarketsintheperformingarts1168Productivitylagandthefinancialproblemofthearts137PartIII:Thefineartsandmuseums9Themarketinworksofart16510Theeconomicsofartmuseums187PartIV:Publicpolicytowardthearts11Shouldthegovernmentsubsidizethearts?21912Publicand/orprivatesupportfortheartsintheUnitedStates,Canada,andWesternEurope250v13DirectpublicsupportfortheartsintheUnitedStates278PartV:Art,economy,andsociety14Theartsasaprofession:Education,training,andemployment31115Theroleoftheartsinalocaleconomy33616Themassmedia,publicbroadcasting,andthecultivationoftaste36017Conclusion:Innovation,artseducation,andthefutureofartandcultureintheUnitedStates385Index403viContentsFiguresandtablesviiFIGURES2.1.Expendituresonadmissionsasapercentageofdisposablepersonalincomepage142.2.Numberofsymphonyorchestrasfoundedbydecade374.1.Demandcurveforanindividualconsumer664.2.Derivingamarketdemandcurve674.3.Supply,demand,andmarketequilibrium694.4.Excessdemandfortickets:aBroadwayhit714.5.Excesssupplyoftickets:aBroadwayflop734.6.Demandcurvesderivedfromademandfunction804.7.Changingequilibriawithashiftingdemandcurve825.1.Demandcurveandtotalrevenue875.2.Demand,marginalrevenue,andpriceelasticity926.1.Performingartscostsandoutput1137.1.Priceandoutputdeterminationforatheatricalenterprise1227.2.Effectofasubsidyonpriceandoutput:anonprofitperformingartsfirm1319.1.Sotheby’sIndexofartprices:selectedcategories,1975–901669.2.Supplyanddemand:singleworkofart1719.3.Supplyanddemand:limitednumberofbuyers1739.4.Artauctionbidbelowreserveprice1749.5.Priceimpactofsupplyincreasebyartist17610.1.Economiesofthemuseumdisplayfunction19411.1.Optimizationinaperfectlycompetitivemarket22111.2.Private,external,andsocialbenefitsofeducation22414.1.Marketandorganizationlaborsupplyanddemand32214.2.Marketsupplyanddemandchangesandlong-runlaborsupply32314.3.Long-rundemandforperformingartists:singleorganization328TABLES1.1.Estimatedsizeoftheartandculturesector,199782.1.Consumerspendingonadmissionstospectatorentertainment152.2.GrowthofartsactivityintheUnitedStates,1970–1997192.3.Trendsinattendanceattheliveperformingarts(forvariouscountries)252.4FoundingdatesofthetenlargestU.S.operacompanies363.1.Surveysofpublicparticipationinthearts,UnitedStates433.2.Internationalcomparisonofparticipationrates453.3.Participationratesbydemographiccharacteristic,1982and1997473.4.Income,education,andexposuretoballet503.5.Theeffectofselectedvariablesonparticipationinselectedartsforms,1997503.6.HowparticipationatliveperformancesrelatestomediaexposureintheUnitedStates523.7.Classicalmusicannualparticipationfrequency543.8.Averageageofparticipantsovertime564.1.Utilityofcompactdisksandofconcertstoahypotheticalconsumer634.2.HypotheticalvaluesofvariablesforEquation4.4784.3.Calculatingquantity
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