Heterogenous appreciation of cultural varieties as a stimulus for individual's innovation

This paper accounts for individuals' heterogeneous appreciation of cultural varieties within a general equilibrium framework, and it analyzes how such an heterogeneity affects the individual's innovative activity. It is found that a lower appreciation of some cultural varieties allows a change in demand composition across cultural goods and services in favor of the lower appreciated varieties. This effect induce individuals to invest a relatively greater effort in generating better quality versions of cultural varieties that are lesse appreciated when individual's innovative ability is more sensitive to appreciation of cultural products. In aggregate, the economy benefits from a higher aggregate innovation effort, a higher growth rate, and of higher wages both of unskilled and skilled individuals when higher appreciation exists in only a subset, rather than uniformly in all cultural industries.