The Demand and Supply for Theatre: A Long-Run Analysis over the Italian Regions

Abstract In Italy cultural policies are often set at national level without taking into account the dualism between the Northern and the Southern regions that exists in different social and economic sectors. Our aim is to fill this lacuna and to examine the Italian theatre market from both the demand and supply side considering the four Italian macro-areas. To this end, we apply both the seemingly unrelated regression and the three stage least square estimation techniques, to identify the factors influencing theatre demand and supply. The empirical analysis is conducted using a 35-year panel data (1980–2014) at country level (20 Italian regions) and separately for the four main areas (each of them including the related regions): North West, North East, Centre, and South and Islands. At the country level, the estimated results confirm as determinants of theatre demand, price and consumer income as well as complementary good (cinema), urban agglomeration and tourism flows. Theatre supply is influenced by past ticket price, income, past attendance, urban agglomeration and public subsidies. At regional level the results provide empirical support for the existence of a strong heterogeneity from both the demand and supply sides. We find that some of the variables that influence attendance and performances at national level play a different role at the local level hence cultural policies should take into account this heterogeneity.