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Cultural capital is assumed to benefit all members of society. It is accumulated through the

consumption of cultural services and is diminished through depreciation. Using the stock of

cultural goods (e.g. cultural heritage, works of arts, literature and music), cultural services are

provided by the cultural services industry; the stock of cultural goods is enlarged by the flow

of new cultural goods created by individuals who are both consumers and creators of culture

and whose utility is positively affected by the cultural goods they created. In the no-policy

market economy, individuals tend to ignore the positive external effects of their cultural

services consumption and creation of cultural goods on other individuals via augmenting

cultural capital and cultural-goods stock. Consequently, less cultural capital and culturalgoods

stock will be accumulated. The efficient allocation can be restored by introducing an

appropriate subsidy that stimulates the consumers’ demand for cultural services, and the

creation of new cultural goods, promotes the accumulation of cultural capital and cultural