| Abstract: |
The paper aims at exploring the economic efficiency of the performing arts
organisations. A parametric stochastic frontier approach is presented as a way
of measuring the performance of cultural institutions. In particular, using
German public theatres as a case study and summarising the empirical findings
obtained in Zieba and Newman (2013), this paper examines how the efficiency of
publicly funded performing arts firms, operating under different
organisational structures, is affected by two types of shocks. First, we
consider what happens to efficiency when there is a funding shock and second,
we consider the effect on efficiency of an increase in competition. The
identification of these effects was made possible by the natural experiment of
the reunification of East and West Germany in 1990. The results suggest that
theatres organised under public law are more efficient than theatres organised
under private law. However, when exposed to the exogenous demand shock after
reunification, the theatres organised under private law react positively to
this competition shock as measured by their efficiency scores confirming that
they better react to the changing market conditions than theatres organised as
public legal forms. |