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  4. Spring 2003
  5. Contracts Between Art and Commerce

Journal of Economic Perspectives

ISSN 0895-3309 (Print) | ISSN 1944-7965 (Online)

Contracts Between Art and Commerce

  • Richard E. Caves
Journal of Economic Perspectives
vol. 17, no. 2, Spring 2003
(pp. 73–83)
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Abstract

Contract structures used in the arts and entertainment industries are central to understanding their economic organization. The structures spring from common bedrock traits of these industries--pervasive product differentiation, all costs sunk, consumers' valuations unpredictable, artists having tastes for how creative work is done. Joint-venture structures are common, with revenue (not profit) shared. Advances to artists help bring incentive and distributive goals into consistency, as do long-term contracts covering successive cycles of the artist's output. Real option contracts allow the efficient allocation of decision rights in a project on which collaborators work successively.

Citation

Caves, Richard, E. 2003. "Contracts Between Art and Commerce ." Journal of Economic Perspectives, 17 (2): 73–83. DOI: 10.1257/089533003765888430

JEL Classification

  • Z11 Cultural Economics: Economics of the Arts and Literature
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