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The ‘Art City’ as a Local Public Good: The Strategic Interplay Between Private Donors and Arts Organizations

PFM, Vol. 3 No. 2, (2003)

In this paper we set up a simple evolutionary game -theoretic
model aimed at addressing the issue of ‘art cities’ promotion and
preservation over time via simultaneous commitment of nonprofit actors
such as private donors and arts organizations. Two classes of agents are
assumed to interact strategically in a ‘double critical mass’ model where
the provision and maintenance, on voluntary bases, of a public-type good
such as an art city is concerned. Uncertainty as to equilibrium outcomes
emerges in that, within both categories, a positive proportion of agents
face the temptation to opportunistically free ride on others’ efforts.
Further, private donors’ and arts organizations’ payoff functions are
interdependent, in the sense that (a) potential donors decide to be actual
donors only insofar as a ‘large enough’ proportion of arts organizations
provide a high effort level – otherwise they act as free riders; (b) arts
organizations prefer to exert a high productive effort only insofar as a
‘large enough’ proportion of potential donors act as actual donors –
otherwise they exert a low effort level. Through this analytical
framework, we are able to focus on the critical factors affecting the
dynamic outcome of the local interaction under study. Under certain
conditions, in a medium-long run perspective, even art cities where,
initially, either a large proportion of agents behave as free riders or a
large proportion of arts organizations exert a low effort level may
manage to survive and flourish.

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