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Subsidies to the Arts with Multiple Public Donors

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  • DAVID AUSTEN‐SMITH

Abstract

This paper develops a theoretical framework for analyzing public funding for arts markets in which both a national‐level arts council and local governments are potential donors. While the arts council is assumed to allocate grants to maximize the expected number of theatres achieving an ‘acceptable’ level of output, the local government is only concerned to maximize its total budget from local tax revenues. Despite this objective, a rationale for local governments to give grants is derived. The total grant allocation to any institution arises as an equilibrium outcome to a game played between the arts council and the relevant local government. Theatre managements take account of this allocation process in making their output decisions. Several empirical propositions are derived.

Suggested Citation

  • David Austen‐Smith, 1984. "Subsidies to the Arts with Multiple Public Donors," The Economic Record, The Economic Society of Australia, vol. 60(4), pages 381-389, December.
    • Handle: RePEc:bla:ecorec:v:60:y:1984:i:4:p:381-389
    DOI: 10.1111/j.1475-4932.1984.tb00873.x
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    References listed on IDEAS

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    1. Thomas Romer & Howard Rosenthal, 1978. "Political resource allocation, controlled agendas, and the status quo," Public Choice, Springer, vol. 33(4), pages 27-43, December.
    2. C. D. Throsby, 1982. "Economics and the Arts: A Review of Seven Years," The Economic Record, The Economic Society of Australia, vol. 58(3), pages 242-252, September.
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