Journal of Cultural Economics

, Volume 37, Issue 2, pp 153–173 | Cite as

The creative instability hypothesis

Original Article


This paper provides an analysis of why many ‘stars’ tend to fade away rather than enjoying ongoing branding advantages from their reputations. We propose a theory of market overshooting in creative industries that is based on Schumpeterian competition between producers to maintain the interest of boundedly rational fans. As creative producers compete by offering further artistic novelty, this escalation of product complexity eventually leads to overshooting. We propose this as a theory of endogenous cycles in the creative industries.


Economics of creativity Creative industries Schumpeterian competition Overshooting 

JEL Classification

D11 D21 Z11 



We are grateful to Bruce Littleboy, John Hartley and Axel Bruns, as well as two anonymous referees, all of whom provided helpful comments on earlier drafts.


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Copyright information

© Springer Science+Business Media New York 2012

Authors and Affiliations

  1. 1.School of EconomicsUniversity of QueenslandSt Lucia, BrisbaneAustralia
  2. 2.School of Economics and FinanceRMIT UniversityMelbourneAustralia
  3. 3.CCIQueensland University of TechnologyBrisbaneAustralia

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