Table of Contents

A Handbook of Cultural Economics, Second Edition

A Handbook of Cultural Economics, Second Edition

Elgar original reference

Edited by Ruth Towse

The second edition of this widely acclaimed and extensively cited collection of original contributions by specialist authors reflects changes in the field of cultural economics over the last eight years. Thoroughly revised chapters alongside new topics and contributors bring the Handbook up to date, taking into account new research, literature and the impact of new technologies in the creative industries.

Chapter 29: Experience Goods

Michael Hutter

Subjects: economics and finance, cultural economics, intellectual property, public sector economics

Extract

Michael Hutter The notion of ‘experience goods’ appears in two strands of literature. The first one originates with Nelson (1970) and links consumer behaviour to information: in order to estimate the utility of an unknown good, the consumer has a choice of searching for information about the good or experiencing the good. Experience goods, in this theoretical tradition, are goods with high search costs. The second strand of literature was triggered by attempts to redefine the set of sectors that make up the economy by introducing a ‘creative sector’ whose branches or industries are characterized by unusually high rates of product change, by high growth rates and by contributions to productivity in the rest of the economy (DCMS, 1998; UNCTAD, 2008). The common feature of these branches is seen in individual ‘creative acts’, but it has also been argued that the consumer’s experience (Bille and Lorenzen, 2008; Bille, 2009) is the decisive feature. The notion of ‘experience goods’ appears to be of increasing theoretical and practical relevance. Experience as a means to an end According to Nelson (1970), consumers who are in the market for goods, but have incomplete information about the benefits obtained from consuming them, have two alternatives to find such information: they can search for available external signals regarding the expected benefits, or they can experience the good and thus generate their own internal information. Experiences in this model are experiments to discover something about the true state of the world that, once attained, will lead to...

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