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, 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.