Competition and the Non-Profit Arts: The Lost Industrial Organization Agenda

The recent industrial organization focus on transaction costs and vertical contracting within the cultural industries (Caves, R.E. 2000, Creative Industries: Contracts between Arts and Commerce. Harvard University Press, Cambridge) stands in contrast to the near abandonment of an earlier literature on horizontal firm interaction and competitive conditions within the performing arts (e.g., Throsby, C.D. and Withers, G.A. 1979, The Economics of the Performing Arts. Edward Arnold, London.; Gapinski, J.H. 1986, J.H. American Economic Review 76(2): 20–25). That incomplete but promising agenda was overwhelmed by the emphasis on non-profit arts firms acting as near natural monopolies, as reflected by Throsby himself (Throsby, D., 1994, Journal of Economic Literature 32: 1–29) and Blaug's survey (Blaug, M., 2001, Journal of Economic Surveys 15: 123–143). This paper resuscitates these earlier inter-firm hypotheses, identifies surprising contrasts with Caves' less frequent horizontal observations, and encourages a revival of interest in studying the effects of competition in the non-profit arts.