Economic theory of culture [Elektronische Ressource] : a dynamic approach / vorgelegt von Sao-Wen Cheng

Cheng Yu Tung East Asian Library - University Of Toronto

Informations

• Publié par: universitat_siegen
• Publié le: 01 janvier 2005
• Nombre de lectures: 8
• Langue: English
• Poids de l'ouvrage: 1 Mo

Extrait

Economic Theory of Culture
A Dynamic Approach





Dissertation
Zur Erlangung des Grades eines
Dr. rer. pol.




Vorgelegt von
Dipl.-Volksw. Sao-Wen Cheng


Siegen 2005




















Erstgutachter der Dissertation: Prof. Dr. Rüdiger Pethig
Zweitgutachter der Dissertation: Prof. Dr. Karl-Josef Koch

Tag der mündlichen Prüfung: 22.12.2004
Prüfer: Prof. Dr. Hans Jürgen Schlösser
Prof. Rüdiger Pethig Dr. Karl-Josef Koch

Internetpublikation der Universitätsbibliothek Siegen:
urn:nbn:de:hbz:467-93
i
Contents




1 Introduction 1

1.1 The role of culture in economic perspective 1
1.2 Human capital vs. cultural capital 4
1.3 Characteristics of cultural goods, services and capital 5
1.4 Outline of the analyze 6

2 The general model 9

2.1 The social planner’s optimization problem in the public-goods 22
model (GM1)
2.2 ization problem in the private-goods 30
model (GM2)
2.3 Comparing the optimal allocation of the models GM1 and GM2 33

3 Transitional optimal dynamics in simplified models 39

3.1 Cultural-capital formation when the stock of cultural goods is constant 39
3.1.1 A simplified public-goods model with constant stock of cultural 40
goods (SG1)
3.1.1.1 The optimal intertemporal allocation 41
3.1.1.2 The optimal time path in a parametric version 43
of model SG1
3.1.1.3 The phase diagram 45
3.1.1.4 Numerical examples for the dependence 56
G1b G1bof k and s on n c c
3.1.2 The simplified private-goods model with constant stock 57
of cultural goods (SG2)
3.1.2.1 The optimal intertemporal allocation 58
3.1.2.2 The optimal time path in a parametric version of 59
model SG2
3.1.2.3 Numerical examples 65
3.1.3 Comparing the optimal steady-states of the models 67
SG1 and SG2
3.2 Accumulation of cultural goods when the stock of 73
cultural capital is constant ii
3.2.1 A simplified public-goods model with constant stock 74
of cultural capital (SK1)
3.2.1.1 The optimal intertemporal allocation 74
3.2.1.2 The optimal time path in a parametric version of 76
model SK1
3.2.1.3 The phase diagram 79
3.2.1.4 Numerical examples for the dependence 91
K1 K1of g and v on n and n c c s
3.2.2 A simplified private-goods model with constant stock 94
of cultural capital (SK2 )
3.2.2.1 The optimal intertemporal allocation 94
3.2.2.2 The optimal time path in a parametric version of 96
model SK2
3.2.2.3 Numerical examples 102
3.2.3 Comparing the optimal allocations in the parametric 104
versions of the models SK1 and SK2

4 Decentralization by prices of the optimal intertemporal 108
allocation

4.1 The benchmark market economy with public goods (BM1) 109
4.2 ay with private goods (BM2) 120

5 Missing markets and efficiency-restoring cultural tax-subsidy 124
policies

5.1 Ignorant consumer-artists in the economies BL1 and BL2 130
5.1.1 The economy BL1 with ignorant consumer-artists (BLI1) 130
5.1.2 The economy BL2 with ignorant consumer-artists (BLI2) 136
5.1.3 Laissez-faire and the transitional dynamics in simplified 139
parametric versions of the economies BLI1 and BLI2
5.1.3.1 The economy BLIG1 141
5.1.3.2 The economy BLIG2 146
5.1.3.3 The economy BLIK1 149 5.1.3.4 The economy BLIK2 155
5.2 Nash consumer-artists in the economies BLN1 and BLN2 160
5.2.1 The economy BL1 with Nash consumer-artists (BLN1) 160
5.2.2 The economy BL2 with Nash consumer-artists (BLN2) 164
5.2.3 Laissez-faire in the economies BLN1, BLN2 and 167
transitional dynamics in simplified versions of these
economies with Nash consumer-artists
5.2.3.1 The economy 168 BLNG1 iii
5.2.3.2 The economy BLNG2 174 5.2.3.3 The economy BLNK1 178 5.2.3.4 The economy BLNK2 187

6 Concluding remarks 195

References 198


1
1 Introduction


1.1 The role of culture in economic perspective

Consumption of culture has a major social component. We share the widespread presumption
or conviction that the consumption of culture yields positive effects for society: creativity will
be further developed, tolerance for others (race and gender) will be enhanced, crime will be
1reduced, and people’s sense of identity will be strengthened. Though economists have exten-
sively discussed the concept of positive externality, they either claim an undersupply of cul-
ture without further specifying what the concrete link between culture and externality is like,
or they enumerate various externalities and invoke them to justify public support for culture.
Those arguments are not stringent, and none is demonstrated analytically, to our knowledge.

For example, Robbins (1963, p. 58) argues that “…the positive effects of the fostering of art
and learning and the preservation of culture are not restricted to those immediately prepared
to pay cash but diffuse themselves to the benefit of much wider sections of the community in
much the same way as the benefits of the apparatus of public hygiene or of a well-planned
urban landscape”. In their pioneering contribution to cultural economics Baumol and Bowen
(1966, p. 382n.) pay much attention to four types of general benefit which flow from the arts:
national prestige, advantages cultural activity confers on business in its vicinity, benefit for
future generations, contribution to education. They also point out that “…performing arts con-
fer direct benefits on those who attend a performance but which also offer benefits to the
community as a whole…”. Peacock (1969, p. 328n.) also invokes intertemporal spillovers of
culture and argues that even “… those who do not understand and appreciate music and
drama may be glad to contribute towards making available their fruits to those who do, and to
those whose tastes are not yet formed. Present generations may derive positive satisfaction
from preserving live performance safe in the knowledge that they do not risk being accused of
narrowing the range of choice of cultural activities for future generations through allowing
arts to die”. Netzer (1978, p. 22n) extends the list of external benefits by adding that the inter-
dependence of art forms tends to support one another, and that innovation is fostered through
artistic undertakings and business advantage through culture and arts. Fullerton (1992, p. 80)
offers a new twist on the externality argument and justifies public support of the arts as fol-

1 See e.g. “The First World Culture Report (1998) of UNESCO, Part one”. 2
lows: If there are enough persons (external beneficiaries) who want others to attend art events
and hence “…are willing to pay to see subsidized arts, and if similar individuals can “free
ride” by enjoying others’ donation, then none of them has sufficient incentive to give to the
arts. It is possible for government, potentially, to make everybody better off by taxing those
individuals who do value others’ attendance, and then using the funds to subsidize the arts.”

While all these positive externality arguments have some appeal in the cultural context, they
are not made precise in formal intertemporal analysis and they do not explicitly account for
the distinctive characteristics of culture. Though Ulibarri (2000) provides a dynamic frame-
work to develop a theory of rational philanthropy in forming “cultural capital”, he rather fo-
cuses on the interdependence between capital market opportunities and public funding for
culture. The present analysis aims at capturing the specificities of culture in a dynamic stock-
flow model by distinguishing - and focusing on the relations - between different aspects of
culture which will be specified below as cultural goods, cultural services and cultural capital.
It then models the social component of the consumption of culture via a process of accumula-
tion (and depreciation) of cultural capital, the creation of new cultural goods to build up the
stock of cultural goods, which in turn affects the individuals’ well-being.

The notions of culture and related terms are applied in the literature in various often incom-
patible ways. We will refrain from surveying and comparing the major concepts comprehen-
sively. Instead, we will define the terms culture, cultural goods, services and capital specifi-
cally for the purpose of the present investigation and will clarify these concepts by relating
them briefly to other connotations and terms suggested in the literature.

In our analysis, it suffices to think of culture “…as being represented by the “cultural sector”
2of the economy” (Throsby 1995, p. 202). Cultural goods are considered to be all items of
cultural significance like heritage buildings, sites, locations,