SPREADING THE BENEFITS OF PRODUCTIVITY INCREASES: PRICE INCREASES, DECREASES, OR BOTH? A CRITIQUE OF BAUMOL ON SUBSIDIES TO THE ARTS

Abstract

This paper attempts to grapple with the market mechanism through which growth in one sector of the economy spreads to other sectors. It calls into question Baumol’s argument for subsidies to the arts and by extension, to other economic areas that have not enjoyed productivity increases.