Frey: Economics of Music Festivals

After struggling with ILL, this article came through.

Frey’s article attempts to identify why music festivals (particularly opera- and classical-focused festivals) are so prominent in Europe. He identifies a couple less significant reasons, which are the most relevant to my paper of those he discussed. Firstly, for attendees, there are advantages in economies of scope, and transaction costs. Patrons often go to these festivals as part of a vacation, which is often booked by a travel agent. Thus, they can simplify the ticket buying process (by having an agent handle it) and get both culture and a vacation. The crux of Frey’s argument is economic, and specific to the labor climate in Europe. Festivals liberate promoters from the strict laws that dictate payment, hiring and firing, and the like of laborers, artists, and employees. Those stakeholders also benefit by picking up extra work. The only other interesting point Frey made was that government subsidies often lead to deficits, because they tend to remove incentives for revenue maximization.