ABSTRACT
Chapter 2 introduces key economic principles, providing a foundation and context for understanding the creative economy. Concepts such as efficiency, equity, perfect markets, and market equilibrium frame ways to consider how resources are allocated for culture. Market failures, market-based solutions, and government failure give shape to broader system dynamics that impact cultural arenas. Welfare state economics and various government points of view weigh equity and social value against capitalist valuation standards, giving us different approaches to think about the mechanisms at work in the creative economy.
