Essays on Culture & Trade

By Ulrika Stavlot
December 2005
Monograph Series, No. 49
Stockholm University
ISBN: 9172659998
155 pages, Illustrated, 6 ¾” x 9 ½”
$59.50 Paper Original

This is a Ph.D. dissertation. This thesis consists of three self-contained essays. The first two essays address the consumption of culture and are closely related in terms of the theoretical framework used. The third essay is a separate analysis of international trade and competition. The studies of culture are motivated by the special treatment of culture consumption in most modern societies: there are unusually large, government-provided subsidies, the aim of which is to stimulate both the production and consumption of culture.

The purpose of the present work is to explore reasons for this special treatment. Using a stylized theoretical framework, the essays contrast culture with another, generic, good or activity. Culture is thus regarded as an “experience good”: previous consumption of the good enhances the current appreciation of the good. The generic good is one where experience is assumed not to be at all relevant for the appreciation of the good. For experience goods, decisions made today will influence future utility and future choices.

This makes the intertemporal preferences of the tyoe that can be characterized as a present-bias – modeled with “multiple selves” using quasi-geometric discounting – as opposed to standard, time consistent preferences, there will be a case for government subsidies. The first essay explores this possibility in detail in a framework where experience is mainly of importance in the short run. The second essay then studies cases where experience is more potent and can cause persistent diversity in culture consumption across individuals.

Economic Theory

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