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Cultural Economic Theory -Sept 17th presentation

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Nuo Yang

on 23 January 2013

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Transcript of Cultural Economic Theory -Sept 17th presentation

Definition: Productivity is defined by economist as physical out put per work hour. Economics of museums, the concept of productivity and Baumol’s cost disease Baumol's Cost Disease Just a second,
why productivity lag matters (James Heilbrun in Towse. A handbook of cultural economics) The productivity in Museum industry: technologies changes a little over time
the work of the performer itself is an end of it. Presentors:
Maya, Natia, Tessa, Wybrich, Yang Nuo Museums differ in their

Institutional form Discussion 2:
Limits of Baumol's cost disease 1) A museum as an economic unit
2)Individuals pursue utilities within certain conditions Economics of museums 2 types of demand

Social Private Demand 1)Admission fee
2)Opportunity costs
3)Price of alternative activities Other determinants: quality of collection, attractiveness of building, amenities, marketing efforts, individual preferences Theories: rational choice theory, political economy/public choice economics, psychological aspects Author: ‘it is not the task to stimulate the economy’ Klamer! -Social/external (negative) effects Social Demand Example: Museum Gouda

Author: ‘managers are interested in own income and prestige within their reference group’ Cost Structures High fixed costs
Marginal costs close to zero
Dynamic cost-Cost Disease
High opportunity costs 3 types of museums Public museums: Expected behavior? Survival depends on government funds Expected behavior? Private museums Survival depends on revenues Museums
depending on donations Expected behavior? -Must see!
-Large number of visitors
-World famous painters/paintings
-Architectural design
-Commercialized: amenities and impact on local economy Super star Museums: a ‘total experience’ Question: What type of museum do you expect Super star museums to be? Characteristics Special exhibitions -High income effect (low production costs)
-Attracting new visitor groups
-High demand by business (sponsors)
-Space for more organizational creativity
-Avoiding government/trade union regulations Implications:
Production Lag Vs earning gap Supply-side economics: lowering barriers for people to supply goods and services

Empirical research, 1993/1994: the evolvement of the museum sector in Montreal Tuft and Milne: Museums, a Supply Side Perspective Different interpretations of terminology create confusing situations,
and causes generalization of many different cases. Museum: a source of society's material culture. Creation of cultural identity society

Cultural heritage as popular leisure and urban tourism activities. Integration museums in cultural development Two expectations out of museums:
People want to learn something
People wish a honest representation of a good local place In order to attract people, different components of the city need to converge, each offering the services and experiences of the other Attracting more people as core value museum?

Popularizing a museum to attract more people? Questions Due to a decline in funding, museums are being pressured to produce a product which maximizes admission revenues.
This they will reach not by increasing urban visitors, but tourists. Conclusion Overall argument is that museums need more visitors
Educational part should not be forgotten
New technologies
Labor issues
Networks and alliances
Agglomeration and museum parks Responding to the changing environment The authors argue that new revenue can be made out of visitors. Right now the admission fees cover only 5 percent of the overall operating budgets. 90's: Usage of museums for economic growth.

Public funding when redeveloping tourist market. But no constancy
Private sources are scarce

Decline in private and public funding. support becomes increasingly difficult to find. Museums and Cultural Economics A museum is:

institution personal biases Object-based museums:
traditional role of museum as archive of objects
collected and conserved for their content
researched and studied
(partially) available for the community Concept-based institutions:
facilitate the transmission of ideas
objects are interchangeable
compete with other institutions
increase visitors
generate public subsidies Consequences:
more staff
increased overhead Object-based museums become concept-based institutions Secondary tasks become more important: stronger market position
close relations with commercial sector
commodification of intellectual resources Recognition of object-based museums is needed, and adjustment of cultural policies accordingly Discussion In what ways can museums generate more revenue from the market? Discussion What is the main function a museum performs in this day and age? Discussion What are the limits of Baumol’s cost disease? ACCESS vs. Other Objectives Conservation
Education Critics
Old data
The rising tide lifts all ships
Technological changes, mass media, royalties
Live performing art Charging Principles How can museums avoid the disadvantages of the cost disease? + sense of involvement
+ price discrimination

- Low revenues
- Cant be the only principle Museum Club + According to willingness and
the ability to pay
+ Possibility of generous donations
+ Sovereignty factor

- Inefficiency
- Overcrowded
- Voluntary Exit donations + Neoclassical approach
+ Efficiency
+ Price discrimination

- Social argument
- Limited segment Entry Charge + Social argument
+ Cultural prestige
+ Appealing for donors

- Overcrowdedness
- Inefficiency
- “something which has no price
has no value” Free Entry How do think you what is the best charging policy for the museums? financing problem of performing arts in the
face of inescapable rising unit cost because of
productivity lag Con:Ticke price? Exit Charge + Time-based system
+Experience-based approach
+ Efficiency

- Opportunity cost
- Has not been tested yet The case of British Museums Brisbane Museums Decisive factor:technology improvement, labor skill improvement, refined management and economies of scale as output rises connection: Display service
If cost in the whole economy decreases,,, the general wages in the economy increases.
In return an industry with productivity lag will have an increased cost .
Productivity lag in museum industry might cause cost rises.
Although cost rises, revenues do not rise automatically
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