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² Meyer, Karl, The Art Museum: Power, Money, Ethics (New York, 1979), p. 211.Google Scholar

³ “Before the end of the century major galleries had been founded in Washington, Philadelphia, Chicago, Brooklyn, Detroit, St. Louis, Cincinnati, San Francisco, Pittsburgh, and elsewhere. In nearly every case they were governed by self-perpetuating private boards, and in time art museum trusteeship was synonymous with wealth,” Meyer, The Art Museum, p. 28.Google Scholar

⁴ The federal government has entered very recently indeed with “the establishment, in 1977, of the Institute of Museum Services, appropriately contained within the Department of Health, Education, and Welfare. With the creation of the institute, the federal government was subsidizing for the first time at least part of basic museum operating costs” (Meyer, The Art Museum, p. 61). However, the direct federal impact is now relatively large: “A recent survey of art museums and four other types, made for the National Endowment for the Arts, classified all museum income as: 63 percent from the private sector and 37 percent from the public sector.” The public's 37 percent share was distributed as follows: “municipal or county governments (18 percent); state governments (7 percent); federal government (12 percent),”Google ScholarParkhurst, Charles, “Art Museums,” in Lee, Sherman E., ed., On Understanding Art Museums (Englewood Cliffs, 1975), p. 85.Google Scholar

⁵ Miller, Lillian B., Patrons and Patriotism: The Encouragement of the Fine Arts in the United States, 1790–1860 (Chicago, 1966).Google Scholar

⁶ Netzer, Dick, The Subsidized Muse (New York, 1973). There are at least two ways in which museums are decreasing cost industries. One relates to the cost to the museum associated with additional viewers, the number of items to be viewed held fixed. The marginal cost to the museum of an additional viewer is small relative to the opportunity cost of the objects to be viewed, and hence average total cost per viewer falls as the number of viewers expands. Even if the output unit is the number of hours per year which the museum is open, or the number of days, a unit more relevant to the cost calculation facing museum managers than the number of visitors per day, marginal cost is well below average fixed cost, and average total cost falls with output. This is the relevant concept of decreasing cost. There is a second sort of decreasing cost, however. Museums conserve the time of viewers by placing objects in proximity to one another. Obviously, then, there is some range over which time-savings to viewers fall as related items are added to the museum's collection. The size of the collection is, also, then, subject to economies of scale. Decreasing cost in this sense plays no part in this paper.Google Scholar

⁷ Nichols, Donald, Smolensky, Eugene, and Tideman, Nicholaus, “Discrimination by Waiting Time in Merit Goods,” American Economic Review, 61 (06 1971), pp. 312–23.Google Scholar

⁸ Donors could presumably pay land costs too, but funding from donors alone is likely to be inefficient due to the free rider problem.Google Scholar

⁹ The Subsidized Muse, p. 15.Google Scholar

¹⁰ Nichols, Donald, Smolensky, Eugene, and Tideman, Nicholaus, “Discrimination by Waiting Time in Merit Goods,” American Economic Review, 61 (06 1971), p. 25.Google Scholar

¹¹ Nichols, Donald, Smolensky, Eugene, and Tideman, Nicholaus, “Discrimination by Waiting Time in Merit Goods,” American Economic Review, 61 (06 1971), p. 27.Google Scholar

¹² Even if all of Netzer's arguments were to hold they would be insufficient for his purposes. Establishing market failure may be a necessary condition for public intervention (at least to economists), but it is not a sufficient condition (especially to economists). If the argument is to rest on efficiency criteria, it must still be established that benefits exceed costs, including the efficiency costs of tax financing.Google Scholar

¹³ Gassler, Robert Scott and Grace, Robin, “The Economic Functions of Non-profit Enterprise: The Case of Art Museums,” Journal of Cultural Economics, 4 (06 1980), pp. 19–31.CrossRefGoogle Scholar

¹⁴ Nichols, Donald, Smolensky, Eugene, and Tideman, Nicholaus, “Discrimination by Waiting Time in Merit Goods,” American Economic Review, 61 (06 1971), p. 24.Google Scholar

¹⁵ Nichols, Donald, Smolensky, Eugene, and Tideman, Nicholaus, “Discrimination by Waiting Time in Merit Goods,” American Economic Review, 61 (06 1971), p. 27.Google Scholar

¹⁶ Nichols, Donald, Smolensky, Eugene, and Tideman, Nicholaus, “Discrimination by Waiting Time in Merit Goods,” American Economic Review, 61 (06 1971), pp. 24–25.Google Scholar

¹⁷ Nichols, Donald, Smolensky, Eugene, and Tideman, Nicholaus, “Discrimination by Waiting Time in Merit Goods,” American Economic Review, 61 (06 1971), p. 16.Google Scholar

¹⁸ Hansmann, H., “Non-profit Enterprise in the Performing Arts,” The Bell Journal of Economics, 12 (Autumn 1981), pp. 341–61.CrossRefGoogle Scholar

¹⁹ Education externalities are not mentioned by Pommerehne and Frey, Gassler and Grace, or Netzer.Google Scholar

²⁰ Hamilton, George Heard, “Education and Scholarship in The American Museum,” in Lee, , ed., On Understanding Art Museums.Google Scholar

²¹ Bazin, Germain, The Museum Age (New York, 1967), p. 249.Google Scholar

²² Taylor, Joshua C., “The Art Museum in the United States,” in Lee, , ed., On Understanding Art Museums, p. 34.Google Scholar

²³ Quoted in Alexander, Edward P., Museums in Motion: An Introduction to the History and Functions of Museums (Nashville, 1979), p. 31.Google Scholar

²⁴ Alexander, Museums in Motion, pp. 31–32; and Parkhurst, p. 88.Google Scholar

²⁵ Lerman, Leo, The Museum: One Hundred Years and the Metropolitan Museum of Art (New York, 1969), p. 48.Google Scholar

²⁶ It should also be pointed out that when the MFA moved to its current building at the beginning of the century, half the costs of that building were financed from the capital gain on the original gift parcel from the city. The museum's right to the proceeds of that sale were explicitly approved by the Boston City Council, so the difference in the early roles played by the Boston and New York City governments is somewhat overstated.Google Scholar

²⁷ This entire discussion is drawn from Whitehill, Walter Muir, Museum of Fine Arts, Boston: A Centennial History (Cambridge, Mass., 1970), vol. 1, chapter 6.Google Scholar

²⁸ Banfield, Edward C., The Democratic Muse: Visual Arts and the Public Interest (New York, 1984).Google Scholar

²⁹ Whitehill, , Museum of Fine Arts, Boston, vol. I, p. 201.Google Scholar

³⁰ Lee, On Understanding Art Museums, p. 2.Google Scholar

³¹ Hamilton, George Heard, “Education and Scholarship in the American Museum,” in Lee, , ed., On Understanding Art Museums, p. 104.Google Scholar

³² U.S. Bureau of the Census, Historical Statistics of the United States, Colonial Times to 1970, Bicentennial Edition, Part 1 (Washington, D.C., 1975), p. 165.Google Scholar

³³ These calculations assume that the museum was open 50 weeks per year and that attendance on weekdays was evenly distributed across the days. Data are from Whitehill, , Museum of Fine Arts, Boston, vol. 1, pp. 40–41.Google Scholar

³⁴ Data are from Howe, Winifred E., A History of the Metropolitan Museum of Art, 2 vols. (New York, 1913, 1946), vol. 1, p. 245.Google Scholar

³⁵ Zajac, Edward E., Fairness or Efficiency: Introduction to Public Utility Pricing (Cambridge, Mass., 1978).Google Scholar

³⁶ Ely, Richard T., Problems of Today: A Discussion of Protective Tariffs, Taxation, and Monopolies (New York, 1888).Google Scholar

³⁷ Whitehill, , Museum of Fine Arts, Boston, vol. 1, pp. 40–41, p. 108.Google Scholar

³⁸ Whitehill, , Museum of Fine Arts, Boston, vol. 1, pp. 40–41, p. 119.Google Scholar

³⁹ Whitehill, , Museum of Fine Arts, Boston, vol. 1, pp. 40–41, pp. 129–31. Ely's preference for public ownership to reconcile decreasing costs with public policy is more in accord with European than American practice. Thus, were economies of scale the root source of public funding for museums, the different financing practices on the two continents would be explained. scale the root source of public funding for museums, the different financing practices on the two continents would be explained.Google Scholar

⁴⁰ Whitehill, , Museum of Fine Arts, Boston, vol. 1, pp. 40–41, p. 117.Google Scholar

⁴¹ Whitehill, , Museum of Fine Arts, Boston, vol. 1, pp. 40–41., pp. 241–42. It is because he mentions museums that the emphasis here is on Ely. Virtually all the great economists of the period were concerned with the implications of scale economies, but only Ely also had something to say about museums.Google Scholar

⁴² Whitehill, , Museum of Fine Arts, Boston, vol. 1, pp. 40–41, p. 240.Google Scholar

⁴³ It also may have contributed to efficiency. Feldstein and Sadka have demonstrated that setting price above marginal cost may efficiently serve a redistribution function. See Feldstein, Martin S., “Equity and Efficiency in Public Sector Pricing: The Optimal Two-Part Tariff,” Quarterly Journal of Economics, 86 (05 1972), pp. 175–87;Google Scholar and Sadka, Ephraim, “On the Optimal Taxation of Consumption Externalities,” Quarterly Journal of Economics, 92 (02 1978), pp. 165–74.Google Scholar

⁴⁴ Banfield, Edward C., “The Economist's Public Library: A Review of Lawrence J. White, The Public Library in the 1980s: The Problems of Choice,” The Public Interest (Fall 1983), pp. 1138–41.Google Scholar

⁴⁵ There has been municipal funding for acquisitions in some museums, St. Louis for example (Bazin, The Museum Age, p. 247). There was also a political advantage to barring acquisitions from municipal funding. Commitment to funding acquisitions would have been an open-ended, long-term commitment. Excluding them kept the city's obligation clearly defined and small, relative to both the city budget and the museum's net worth.Google Scholar

⁴⁶ Walras, Léon, “The State and the Railways,” trans. P. Homes, Journal of Public Economics, 13 (02 1980), pp. 81–100. This article is the translation of a mémoire that Walras wrote in 1875, subsequently lost, and finally recovered sometime in the 1880s. It is a minor masterpiece in public economics.CrossRefGoogle Scholar

⁴⁷ Walras, Léon, “The State and the Railways,” trans. P. Homes, Journal of Public Economics, 13 (02 1980), p. 85.CrossRefGoogle Scholar