ABSTRACT
This chapter shows that the choice of institutions has a predictable impact on the quantity and quality of theatrical performances, as well as on the type and method of their production. The emphasis lies on the supply of art. Cultural institutions are analyzed using the economic approach which has two distinctive characteristics: First, individuals are the actors. The second fundamental point of the economic analysis of cultural institutions consists of the comparative view. Theater can take the form of a cooperative organization. The chapter discusses why the cooperative theater, when successful, must nearly always be abandoned and replaced either by a profit-oriented or a government-supported institution. It deals with the behavior of the capitalist, profit-oriented theater institutions. The differences in behavioral modification depend on the particular form of public support that is provided. The chapter discusses three types: lump sum subsidy, ticket subsidies, and deficit coverage.
