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Municipal Financing of the U.S. Fine Arts Museum: A Historical Rationale

Published online by Cambridge University Press:  03 March 2009

Eugene Smolensky
Affiliation:
Professor of Economics, University of Wisconsin, Madison, Wisconsin 53706.

Abstract

Municipal involvement in the finance of fine arts museums raises the question: Just which market failure serves to rationalize this public subsidy? Two contenders are prominent in the literature: decreasing costs and education externalities. The relationship of price to marginal cost provides an operational test to distinguish among the two rationales. Scattered data from the 1880s and 1890s as well as contemporary discussion indicate that, implausible as it may seem now, education externalities constituted the operational justification for the public subsidy.

Type
Articles
Copyright
Copyright © The Economic History Association 1986

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References

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8 Donors could presumably pay land costs too, but funding from donors alone is likely to be inefficient due to the free rider problem.Google Scholar

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