Why Do Governments Financially Support the Creative Industries?
This chapter discusses the reasons why governments financially support the creative industries, both from the point of view of cultural policy and economic theory. Cultural policy reasons for financial support of the creative industries include the furtherance of excellence , innovation , and access ; recognition and celebration of national, regional, or local identity ; promotion of continuity; and furtherance of diversity. Economic policy reasons include the contribution of the creative industries to the economy; perceived positive externalities ; the desire to redress free rider behavior; the difficulties some creative industries face for increasing productivity when costs increase; and the desire to reduce the negative effects of the cost structure of many creative industries, where there is a combination of high sunk and fixed costs and low marginal costs .
KeywordsCultural policy Economic policy Innovation Identity Diversity Market failures Externalities Free rider behavior Public goods Impure public goods Baumol’s cost disease Sunk costs Fixed costs Marginal costs Economies of scale
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