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.
The Review of Austrian Economics – Springer Journals
Published: Jan 18, 2007
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