Rev Austrian Econ (2007) 20:1–10
When should regions bid for artistic resources?
Published online: 18 January 2007
Springer Science + Business Media, LLC 2007
Abstract Under a variety of assumptions, subsidized bidding for creative resources
fails to spur economic growth. First, under many conditions, the resource would ﬁnd
an optimal location in any case. Second, the bid may be good for a winning city’s
economy, but bad for the arts more generally. The bid winner is not necessarily
the most appropriate home for the resource. Third, bids based on publicly available
information are unlikely to beat the market price for attracting those resources. The
key to stimulating growth, and drawing successful creative resources, is to stimulate
the underlying microconditions for entrepreneurship, whether in the private or public
sectors. Furthermore, we should make arts subsidies less location-speciﬁc.
Should regions make special bids to attract growth-enhancing resources? And more
speciﬁcally, might the arts serve as such a resource? If so, under what conditions?
Such questions have at least two motivations. First, we are interested in under-
standing economic growth more generally. We wish to know to what extent historical
growth has been driven by the arts, or by bidding for productive resources more gen-
erally. Second, we face ongoing policy questions about how to generate economic
growth, and how governments should support the arts.
For the purposes of exposition, I will refer to artistic resources. Particular examples
of these resources may include a celebrity, a ﬁrm, a nonproﬁt, a stadium, or perhaps
a whole artistic sector. The key assumption is that such resources produce economic
(and presumably cultural) value for a region, but only if they are located or based in
T. Cowen (
Department of Economics, George Mason University, Fairfax, VA 22030, USA