Political economy is the methodology of economics applied to the analysis of political decision-making, behaviour and institutions. From its beginning, it has experienced a vast diffusion across all areas of economic research. A central aspect of the analysis is the presence of information asymmetries pervading all steps of the political decision-making process: from voting to electoral competition and from government policy-making to the implementation of policies. There is a growing literature in cultural economics that adopts the political economic approach, although its range of topics is still limited. This chapter highlights the main issues characterizing political economy and its recent developments, illustrating how it contributes to the assessment of cultural policies. The discussion also suggests that empirical research should pay attention to the salience that cultural expenditure may have for voters and politicians, to be identified in a specific political and behavioural model underlying the analysis. The chapter concludes by suggesting future research on topics highly debated but not yet adequately investigated.
Manfred J. Holler and Isidoro Mazza
Luigi Di Gaetano and Isidoro Mazza
This chapter analyses the economic determinants of philanthropic behaviour. Altruism apparently contradicts the common tenet of self-interest. However, donations do not seem to emerge from ‘pure altruism’ only. It is necessary to identify the incentives to donate and to verify the extent of their consistency with the assumption of rational agents. Moreover, it is important to understand how public policies could affect such incentives. Philanthropy is a central issue in cultural economics because private support to the arts is becoming increasingly important for the existence and prosperity of cultural institutions.
Paolo Di Caro and Isidoro Mazza
Art quality is an elusive concept in the contemporary art market. It is difficult to find consensus even among artists. Even more difficult is to define the link between quality and price. In this context of high uncertainty, empirical observation suggests that galleries have a significant impact on the career of artists. This chapter aims at providing some useful tools for understanding and interpreting the prominent role of art galleries in today’s art markets by illustrating the reasons why the market needs intermediaries and gatekeepers such as the commercial galleries.
Paolo Di Caro, Luigi Di Gaetano and Isidoro Mazza
Intermediation is common in many markets. Intermediaries help to solve different problems that may hinder the matching between demand and supply. In the art market, galleries constitute intermediaries between collectors (buyers) and artists (sellers). Galleries perform many functions. They contribute to the success of artists, for example, by increasing the visibility of the artists (especially those at the beginning of their career) through gallery shows, and by promoting and financing institutional shows. Galleries also help the buyers to select artists by providing information, reducing searching and transaction costs. Moreover, building on their reputation they reduce uncertainty about the future of the artists they represent. These functions improve the efficiency in the art market, where network externalities are evident. Their presence substantially enhances the relevance of galleries for the performance of the art market.