Economics of Cultural Heritage

Cultural heritage is divided into two parts: one that can display in a museum (paintings, sculptures, installations) and real estate

What role for museums?
Facade of the Metropolitan Museum of Art, May 30, 2004. By its size and budget, this museum is part of institutions whose policy of conservation and exhibition of international consequences.

Museums have a dual role: to preserve the works entrusted to them and expose them to the public. Although the statutes are very different (the national museum in the private school), almost all museums are explicitly non-profit. They have therefore a kind of public good, and raise funding problems associated with it: the museum should he stand on its own or receive subsidies equivalent to as much tax? This problem is exacerbated by the fact that while the value of museum collections is enormous, their budgets are very limited. Moreover, often located in downtown, it is very expensive to extend their surface exposure to the rhythm of their acquisitions. Thus American museums expose only half of their reserves, yet very important part in relation to European museums (less than 5% of collections are exhibited at the Georges Pompidou center and the Musée du Quai Branly.

Meanwhile, there is a conflict between the two functions of museums. Indeed, the need for conservation grows to a limited exposure (exposure damages the works), preferably works little known and addressed to a specialist audience, to publicize the little known artists and advance the search. Conversely, the need for exposure stems from a desire to allow the general public the essential works of different cultures, and therefore calls for large exhibitions of famous artists, to attract the largest museum number. It is therefore essential to understand what role played by different actors (museum directors, curators, curators) and provide incentives to find the right balance between their two roles. This piece of economic analysis of the museum is therefore largely tools of the industrial organization, particularly the theory of contracts.

A final element was recently added to the preceding, the management of intellectual property. The bulk of museum collections are indeed in the public domain. However, an increasing share of revenues from museums products (postcards, catalogs, etc..), Which encourages them to limit or prohibit the reproduction of these works both for conservation reasons (flashes damage tables) and to preserve this source of funding. The problem is intensified when one considers a set of works. If each is in the public domain, their choices among all possible works, the comparisons between them are the result of work of curator, and thus derive from its intellectual property. This element therefore contributes to the debate on the rights of persons brought to create original elements as part of their duties.

Old stones
The Chateau de Chambord, listed since 1981 in World Heritage of UNESCO, illustrates the growing importance of immovable cultural heritage in cultural policies.

Immovable cultural heritage is a growing collection of buildings and fixed structures which are assigned a special cultural significance. In many countries, like what is done in France, is a ranking system (the Inventory of Historic Monuments) entitling the owners of such property tax cuts and aid for restoration in exchange limitations on the possibilities of building changes and the requirement to partially open to the public.

The study of the effects of these measures is still in its infancy. If for large sites (Castle of Chambord, Sistine Chapel), the same arbitration between museums for preservation and exhibition there, one wonders if it is really necessary to restore all French chateaux. Similarly, evaluation of inefficiencies of capital allocation driven by these niches tax remains virtually nonexistent.

Cultural property: goods like no other?

Features of Cultural Property

While an original work, a painting or sculpture are poorly reproducible (missing copying something that gives full value to the original), there is a wide range of cultural property where the support is not d importance, and where the important parameter is the value of many copies of an original: books, CDs, movies, etc.. These properties are the heart of the cultural industries. Their precise definition raises many problems of definition (see Economics of Cultural Industries). Here we consider that it is essentially publishing of books, recordings, film and television and broadcasting.

Cultural industries are characterized by several principles that distinguish cultural property
nobody knows: success (and hence demand) for a cultural given is very difficult to predict, even by specialized agents sector. This feature stems from the nature of experience goods pure (also known properties of prototype).
infinite variety: while normal goods (car, computer) are differentiated on a finite and relatively small features, cultural goods are differentiated on a large number of features, making them not comparable. Moreover, most of these characteristics are subjective, and therefore can not be compared to process objectives.
concentration of sales: the majority of sales are concentrated on a small number of successful varieties (bestsellers or blockbusters).
short life cycle: the bulk of sales for a particular property is realized in the weeks following its sale. If sales have been poor during this period, it takes a special event to boost sales.
fixed costs very important: most of the costs is incurred before the sale of the first unit. For example, the cost of a film are several orders of magnitude greater than the cost to take a new copy.

Economic analysis of cultural industries interested in the foundations of these characteristics (study of the application of Cultural Property), the mechanisms established by the tender to take account of these constraints (with the tools of the industrial organization) and their consequences for the quality and variety of goods produced.

The offer includes the application available?

Francois Rouet noted that in the case of the book, the editorial choice depends less on a choice in the supply of what seems to respond to a request that the possibility of creating an application corresponding to the selected works. It thus illustrates the obscurity of the relationship between supply and demand for cultural goods. On the one hand, we observe that advertising expenditures are not only a signal of good quality, but have a role in shaping consumer preferences, showing a particular subject or genre as belonging to a cultural level and style of life given. However, Caves shows in the same chapter that the correlation is far from robust, and that films have incurred considerable expense (as The Bonfire of the Vanities of Brian De Palma) but failed to significantly increase demand.

The characteristic of "infinite variety" combined with uncertainty implies that there exists for cultural phenomena reversed chain (as in John Kenneth Galbraith) in that supply, namely production, is always a proper choice in the space of infinite dimension of goods available. However, the property of nobody knows highlighted above implies that the final sorting between goods meeting a critical or commercial success is primarily unknown preferences of the application, easily manipulated by the offer.

The importance of learning effects

As noted by R. McCain consumption of cultural goods depends on the existence of an economic asset that names the specific taste. This taste for a class of goods is directly linked to the training to assess these properties, as a course of art history from the Renaissance to a picture of Titian and the number of items of the same type consumed previously. One can thus argue that reading Harry Potter and the Order of the Phoenix is all the more enjoyable it has already read the previous volumes.

The taste is analyzed so as a form of capital accumulating the mere consumption of cultural goods. The consumption of cultural goods is therefore part of the phenomena of rational addiction which can analyze a dynamic response of the consumption of cultural goods to price changes and supply. In particular, because of the complementarity between the value of the stock of capital and the benefit derived from this consumption, the demand for cultural goods is not responding belatedly to a higher income or prices the first effect amplifying the "Baumol's disease

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