Subsidies to the Arts with Multiple Public Donors

Michael D Austen-Smith*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

5 Scopus citations


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.

Original languageEnglish (US)
Pages (from-to)381-389
Number of pages9
JournalEconomic Record
Issue number4
StatePublished - Jan 1 1984

ASJC Scopus subject areas

  • Economics and Econometrics


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