Cultural goods and their positive externalities

Abstract

No‐one can doubt the positive externalities of culture and its impact on stimulating the economy. Ideologies are also easy to find for justifying particular ways of subsidizing culture. On the other hand, the techniques that can be assigned to the ideologies involve serious difficulties.

This paper reviews the most relevant arguments for subsidizing culture. It considers the following three questions, with respects to the grounds for subsidies:

1.	What to subsidize and why?
2.	Where and from whom to take the money?
3.	What techniques should be used for effecting such a financial transfer?

These questions are investigated in connection with a debate on setting up an organization of the “Arts Council type” in Hungary.

Keywords:

• culture
• finance
• externalities
• ideology