Perverse outcomes of intense competition in the popular arts and its implications for product quality

A theoretical model is presented demonstrating how the quality of art output can fall when competition intensifies. When search costs are high, additional entries beyond a certain threshold are not reviewed, leading to no quality improvement from increasing the number of products in the pool of potential entries beyond this point. Furthermore, adding marginal quality products into the pool can dilute the quality of the pool. When firms have perfect judgment, the product selected is the best in the pool making dilution of the pool unimportant. However, when firms make large errors in judging the quality of entries, the quality of the selected product will fall when the average quality in the pool falls. A simulation model is utilized in addition to an analytical model to show likely outcomes with reasonable model parameters.

How do your rivals’ releasing dates affect your box office?

In this paper, we study to what extent a movie’s box-office receipts are affected by the temporal distribution of rival films. We propose a reduced-form empirical model to measure and test competition effects among films released close to each other in a standard regression framework. Such an analysis is appealing in terms of its policy implication and may provide guidance to distributors to decide on their releasing dates of their firms. We estimate this model using information on the films released in five countries: the USA, the United Kingdom, Germany, France and Spain. The geographical dimension of our data set permits us to control for unobserved heterogeneity among films released using panel data techniques, which allows us to evaluate the individual and specific effects of each film. Thus we deal with one of the most relevant features of the movie market, namely the presence of highly differentiated products.     

Measuring allocative efficiency in Cultural Economics: the case of “Fundación Princesa de Asturias” (The Princess of Asturias Foundation)

The literature on Cultural Economics provides us with some examples for the measurement of technical efficiency. However, there are few case studies dedicated to the analysis of allocative efficiency. The aim of this paper is to fill this gap by incorporating a methodology that analyses both technical and allocative efficiency. We use the Shephard’s distance function, particularly suitable when affronted with non-profit-making firms or institutions that are not interested in cost minimization. As an empirical application, we analyse the efficiency of Fundación Princesa de Asturias (PAF), a Spanish non-governmental organization devoted to promoting the cultural, scientific and humanistic values of universal heritage, the period of study being 1988–2012. Our findings suggest that PAF could have used 7% less inputs to achieve the same level of output. On the other hand, we have found allocative inefficiency. Concretely, the input for other expenditures appears to have been over-utilized in relation to both the inputs for labour and current assets, with labour in turn being over-utilized in relation to current assets. Moreover, our results indicate that both technical and allocative efficiency have clearly improved during the period analysed. In summary, our empirical application shows how distance function methodology can be successfully implemented to measure allocative efficiency in cultural firms and institutions.     

Do museums foster innovation through engagement with the cultural and creative industries?

The recent narrative on museums as catalysts of innovation and growth considers their relations with other cultural and creative industries (CCIs) to be very important. We argue that most relations museums establish with CCI firms and institutions are unlikely to produce strong positive externalities that make the latter more innovative. To prove this claim, we propose a conceptual framework qualifying project-based and supply chain relations between museums and CCIs as either strong, moderate, or weak links, according to their potential in terms of knowledge spillovers from museums to CCIs. We apply this taxonomy to data collected from 261 Polish museums. Our findings indicate that strong links are outnumbered by moderate and weak ones. We then suggest that the traditional missions of museums, in particular education and conservation, need to be more thoroughly assessed in terms of their direct and indirect contributions in order to fully capture the impact of museums on innovation in the wider economy.

     

Quality,service level,or empire: which is the objective of the nonprofit arts firm?

In this article, we examine the objectives of nonprofit arts firms. We approach this problem from both theoretical and empirical angles, building a structural model of arts nonprofit utility that distinguishes between the maximization of quality, the organization’s level of service, and its budget. We then construct an empirical method for testing which objective is evident in firm-level data. As an example application, we test the objectives of the managers of American public radio stations in the 1990s, finding that about half of stations have discernible objectives. The data show service is not an objective for about 30% of the stations; quality can be ruled out for 49%; and budget is rejected for 69%. In addition, large stations are harder to classify by objective than small ones are.

The influence of book advertising on sales in the German fiction book market

Driven by the pressure to permanently release a large number of books, publishers have to allocate limited advertising budgets across the wide range of newly released books. As in many creative industries, publishers often focus their advertising activities on potential top sellers written by recent bestselling authors. Considering potential selection effects in choosing the “right” books for advertising, this paper investigates (1) whether selection effects exist and to what extent potential selection effects influence the relation between book advertising and book sales and (2) the boundary conditions under which book advertising leads to higher sales by focusing on the “star power” effects of authors. By applying propensity score matching to a dataset of 598 fiction books from the German book market, we identify substantial selection effects that lead to a serious overestimation of advertising effectiveness by up to 41 % (10,000 copies sold). Using group analyses, we find that sales of books written by recent bestselling authors are not significantly influenced by advertising activities of publishers; however, the sales of books written by lesser-known authors can be increased significantly if they are advertised. Our findings are highly relevant for publishers, indicating that a shift in the allocation of advertising budgets toward promising books by lesser-known authors is recommended to improve the overall advertising effectiveness.     

Revenue and attendance simultaneous optimization in performing arts organizations

Performing arts organizations are characterized by different objectives other than revenue. Even if, on the one hand, theaters aim to increase revenue from box office as a consequence of the systematic reduction in public funds; on the other hand, they pursue the objective to increase its attendance. A common practice by theaters is to provide incentives to customers to discriminate among themselves according to their reservation price, offering a schedule of different prices corresponding to different seats in the venue. In this context, price and allocation of the theater seating area is decision variables that allow theater managers to manage their two conflicting goals to be pursued. In this paper, we introduce a multi-objective optimization model that jointly considers pricing and seat allocation. The framework proposed integrates a choice model estimated by multinomial logit model and the demand forecast, taking into account the impact of heterogeneity among customer categories in both choice and demand. The proposed model is validated with booking data referring to the Royal Danish theater during the period 2010–2015.     

The efficiency of German public theaters: a stochastic frontier analysis approach

In recent years the economic performance of public non-profit sectors such as cultural services has become an interesting economic issue. This is due to the high dependence of cultural institutions on public funding on the one hand and the increasing cost-pressure on public budgets on the other hand. In order to achieve an efficient, cost-minimizing resource allocation public authorities who decide on the distribution of public budgets need reliable performance indicators. Against this background, this paper analyzes the efficiency of German public theaters for the seasons 1991/1992–2005/2006. Using a stochastic frontier analysis approach, we test whether the assumption of cost-minimizing behavior is reliable in this sector. Moreover, several panel data models that differ in their ability to account for unobserved heterogeneity are applied to evaluate the impact of unobserved heterogeneity on the efficiency estimates. The results indicate that the cost-minimizing assumption cannot be maintained. Consequently, an efficiency analysis based on a cost function approach seems inappropriate in the case of German public theaters. Further, we find a considerable unobserved heterogeneity across the theaters, which causes a significant variation in the models’ efficiency estimates. This implies that failing to account for unobserved heterogeneity leads to biased efficiency values. Overall, our results suggest that there is still space for improvement in the employment of resources in the sector.     

Effects of culture on firm risk-taking: a cross-country and cross-industry analysis

This paper investigates the effects of national culture on firm risk-taking, using a comprehensive dataset covering 50,000 firms in 400 industries in 51 countries. Risk-taking is found to be higher for domestic firms in countries with low uncertainty aversion, low tolerance for hierarchical relationships, and high individualism. Domestic firms in such countries tend to take substantially more risk in industries which are more informationally opaque (e.g., finance, mining, oil refinery, IT). Risk-taking by foreign firms is best explained by the cultural norms of their country of origin. These results hold even after controlling for legal constraints, insurance safety nets, and economic development.     

National Science Foundation Patronage of Social Science, 1970s and 1980s: Congressional Scrutiny, Advocacy Network, and the Prestige of Economics

Research in the social sciences received generous patronage in the late 1960s and early 1970s. Research was widely perceived as providing solutions to emerging social problems. That generosity came under increased contest in the late 1970s. Although these trends held true for all of the social sciences, this essay explores the various ways by which economists in particular reacted to and resisted the patronage cuts that were proposed in the first budgets of the Reagan administration. Economists?? response was three fold: to engage in joint lobbying with other social scientists, to tap into their authority as a respected policy player, and to influence the types of research financed by the patron. With interviews of the former lobbyist for the social scientists, the former director of the Economics program for the National Science Foundation, and a review of the archival records of economists and their scholarly society, we discuss how economists have claimed entitlement to patronage in the closing decades of the twentieth century. We observe a dynamic and productive relationship between politicians and researchers mediated by the National Science Foundation, where civil servants, lobbyist and public minded scientists, and self-serving grantees trade roles.     

Characteristics of Italian art restoration firms and factors influencing their adoption of laser technology

Given the limited number of studies on this topic, the aim of this study is to better understand the characteristics of art restoration firms in Italy, with particular reference to their use of innovative technologies such as laser technology. The paper is supported by a survey conducted in a sample of 100 companies. The factors that have led firms to adopt or resist the adoption of the laser were identified and analysed. The results show that the main determinants of laser adoption are collaborative activities between the firms and universities and specific requests made by public institutions to use this technology.

Prices for superstars can flatten out

We reconsider Rosen’s economics of superstars model establishing, in the case of single-type consumers, a constant price-to-quality ratio. Rosen also conjectured that, in the case of multiple-type consumers, the normal course of consumer behavior forces the price-to-quality relationship to be convex and prevents it from being concave. We show that this conjecture is false and explain why there is no a priori reason to rule out concavity in the price-to-quality relationship. In this model, the market matches consumers to artists on the basis of quality: consumers of each type select only one level of quality, supplied by artists endowed with a specific level of talent. The concavity or convexity of the price-to-quality relationship is non-trivially related to the way both populations are matched. Consumers with poor knowledge have greater fixed costs above and beyond the price they have to pay on the market. They are therefore less reluctant when prices rise sharply and they specialize in levels of quality that entail a high marginal appreciation of quality: this can mean either a high or a low level of quality, depending on price curvature. With convexity, as Rosen pointed out, they turn toward superstars. Symmetrically, convexity encourages connoisseurs to turn toward low quality. But concavity too is fully possible: consumer–artist matching, for the same reasons, simply has the reverse effect. Connoisseurs go for great talents, whose price of quality flattens out. The global shape of the price-to-quality relationship (concave or convex) is determined by market clearing conditions and, more crucially, by the distribution of agents on both sides.     

Evidence of the existence of the cost disease in the performing arts

This paper examines the experience of 25 large U.S. orchestras over a 21-year period for the presence or absence of the cost disease. Appropriate measures of input and output are discussed. Measures of productivity, compensation per worker, and unit labor costs are calculated and compared to similar measures for the manufacturing sector. The history of ticket prices and attendance is reviewed, and price and income elasticities of demand are estimated. The relationship between all these variables is explored, and some policy recommendations are offered.The author is grateful to Professor William Baumol and two anonymous referees for their helpful comments. She also wishes to thank Heather Dinwiddie and Dan Patterson of the American Symphony Orchestra League for making the orchestra data available. Support for this project was provided by a grant-in-aid of research from Indiana University Southeast.     

Some modest proposals

Conclusions The foregoing proposals are examples of inexpensive projects in science and technology in the developing countries; they are feasible even in a time of shrinking budgets. Although they are based on actually perceived needs, none of them is a certainty. They are no more than efforts to open the path of exploration, put forward with the intention of arousing the imagination and will of scientists and officials, governmental and academic.We still know little about the institutional workings of science. There is no body of systematically studied experience available to us in such a domain as that discussed above. It is mainly through interest, enthusiasm, and above all a dogged perseverance and incessant readiness to try new things that we can make progress towards the goal.     

How Relevant is Transaction Cost Economics to Inter-Firm Relationships in the Music Industry?

This paper applies the transaction cost framework to the organisation of product sourcing and development (PS&D) activities within the popular music industry. Two firm types characterise the industry and this particular set of activities; large multinational firms (`majors') and smaller regionally bound companies (`independents'). We find that the Transaction CostEconomies framework of Oliver Williamson (1985, 1999) provides only a partial explanation for the observed hybrid organisational structures established by the two firm types. A more sensitive model can be achieved by including a number of moderating variables drawn from the socially constructed and situationally dependent idiosyncrasies of the assets involved in the PS&D activities under consideration.     

Digital preservation of Brazilian indigenous artworks: Generating high quality textures for 3D models

Three-dimensional (3D) digital preservation aims at generating 3D models of objects that have cultural or scientific value. It allows realistic visualization of objects through virtual museums or scientific applications, and the restoration of the preserved object in case of natural wear or accidents. This work contributes to this research area by presenting a method to improve color texture quality of 3D models obtained from color and depth images of a laser scanner. Although this device offers precise depth information, the resulting color information is still poor and limits the generation of realistic textures. Our approach is to capture photographs of the object with a high-resolution digital camera and use them to generate a new color texture for the 3D model. Our work proposes a practical technique, easy to replicate, to generate high quality textures for 3D models from photographs. The method is composed by three main steps: (1) calibration of the image acquisition devices; (2) data acquisition; and (3) texture generation. In this paper, we detail our color texture generation method and apply it on the digital preservation of many artworks made by native Brazilians (indians) from the Wauja and Karaja communities. These indigenous communities are acknowledged as great ceramic artists, each bearing their own main themes, using a very rich symbolism in their paintings. Their artworks represent important aspects of the native South American culture and their digital preservation is motivated by three main reasons: (1) their fragility; (2) the paintings loose their original appearance with time; and (3) the possibility of extinction of these communities. We present several results of preserved artworks with enhanced quality realistic texture maps. Also, we present a methodology to analyze the quality and accuracy of texture maps. The resulting 3D models can be visualized through a tool we developed to support the virtual exhibit of 3D preserved heritage.     

Price Indices for Artists – A Proposal

This paper proposes a price index for artists adjusted for the quality of the paintings, based on the ratio between the average market price and the average pre-sale estimate for paintings. We apply this methodology to a group of selected artists and schools presented in auctions worldwide in the period 1990–2001. A comparison with quality unadjusted and hedonic indices is also conducted.JEL Classification: C10, Z11     

Strategic Agency and System Diversity: Conceptualizing Institutional Positioning in Higher Education

This paper argues that the impact of individual higher education institutions’ strategies on system diversity should be explored. By looking at how universities respond strategically to governmental policies as well as to the actions of other (competing) institutions, our understanding of determinants of diversity can be enriched. A conceptual framework focusing on institutional positioning is explained using the dimensions deliberateness of organizational actions versus environmental influence, on the one hand, and differentiation versus compliance, on the other. We posit institutional positioning as the mechanism through which organizational and environmental levels are linked. Our model features multiple dimensions and relations reflecting how higher education institutions locate themselves in specific niches, i.e. positions where they are able to gather the necessary resources for their core activities. The implications for research on diversity and for policymaking are discussed.     

Life Securitisation,the Event Object of Insurance and the Strategisation of Time

Understanding the matter of insurability as a problem of governing uncertainty has led to thinking ‘the event’ as the object of insurance. How the event is understood and conceptualized determines to a great extent the ways in which its related uncertainty will be rendered. This, in turn, will determine how such uncertainty will be managed. Although this idea has been widely explored with important nuances by various scholars, what has not been discussed in great detail is the problematic idea of temporality and the role time plays in helping constitute the event object of insurance. Such a problem is of great relevance for pushing forward the debate on the limits of insurability. The empirical cases used in this article, Swiss Re's Vita and Kortis, launched and developed during the last decade, relate to hedging the exposure of life and health insurance portfolios to events that would generate excess mortality and excess vitality. The schemes, as explored here, are not simply actuarial, although actuarial practice still figures prominently in their crafting. They involve the strategic articulation of varied forms of knowledge that enshrine particular understandings of time and produce the truth-base of insurable events.     

Recognition and renown, the structure of cultural markets: evidence from French poetry

This article explores the organization of cultural markets through the case of French contemporary poetry, distinguishing the market for recognition and the wider market for renown. The market of poetry is made of large-scale and reputed publishers and a wide range of smaller firms, which serve as testing grounds for new authors and innovation. How can the movement of an a priori narrow-appeal literary genre from small publishing houses to large-scale firms be explained? It is argued that if the status of firms is remarkably stable, artists may move from small publishers to large-scale ones. Statistical evidence is used to illustrate this passage, shedding a new light on the structure of cultural markets and the role of reputation in organizing commercial circuits. Future directions for research are offered.