Journal of Economic Perspectives: Vol. 17 No. 2 (Spring 2003)
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Contracts Between Art and Commerce
Caves, RichardE. 2003. "Contracts Between Art and Commerce ." Journal of Economic Perspectives, 17(2): 73-83.
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.
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Caves, Richard E.
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