Terminal muy pequeño de la abertura
The law of Baumol is an economic theory formulated by the American researcher William Baumol, helped of William Bowen.
The theory proposes to untie the problem of the public finance of the industry of the live performance.
In 1965, the two authors are charged by the Ford Foundation with producing a diagnosis on the economic health and the operation of the theaters in New York. Perfoming Arts: The Economic Dilemma (1966)
They wish to explain the reasons for which the theaters of Broadway know an increasing increase their costs of exploitation, their chronic not-profitability and a rarefaction of their public.
According to this law, the asset cultural spectacle develops in a " sector archaïque" characterized by the stagnation of the technological innovation. Consequently, the productivity gains are quasi-non-existent ( productivity lag ). The factor work prevails then and remains incompressible (one cannot for example withdraw the tenors in an opera). Moreover, the wages of the show business tend to be aligned on the other sectors. The production costs rise in the same proportions. The receipts as for them grow less quickly ( earnings gap ), generating inflationary tensions. This characteristic is known under the name of " disease of the coûts" ( Cost disease ).
The damming up of this dynamics is difficult because the economies of scale are difficult there to realize. Indeed, the number of representations is limited. The price of the place of spectacle is fixed before launching. The frequentation (request) is inelastic with the margin, quality being dominating in a reasonable price range in the choice. The single room for maneuver remains the qualitative increase.
The public always seeks more daring spectacles, therefore expensive. The prices of the tickets are always increasingly high, not making it possible to allure new customers and being likely in worst case to blow the existing request. The producers of the market live performance are then confronted with a chronic lack of liquidities (equities).
For the public authorities a dilemma is posed: either they finance spectacles increasingly more expensive, or they let many actors leave the market by reducing to poverty the offer. Baumol concludes with the financing need external, patronage, public funds, taken near the modern sectors.
The sector of the live performance does not answer the rule of capitalist free competition
External bonds
Chapter 11: Baumol' S cost disease of Heilbrun
CV of William Baumol
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