Working papers, Department of Economics, WU (Wirtschaftsuniversität Wien)
Susanne Schönfeld and Andreas Reinstaller
The effects of gallery and artist reputation on prices in the primary market for art
Abstract: This paper advances a decision theoretical foundation for
pricing scripts by means of a simple model of product differentiation
implementing the undercut-proof equilibrium concept. We argue that while
sociological factors play undoubtedly an important role, economic analysis
can complement the insights from economic sociology on pricing in the
primary art market. Our model analyzes the effects of the gallery's and the
artist's reputation on the price the gallery charges. The results suggest
that prices positively correlate with an artist's reputation and negatively
correlate with a gallery's reputation. The model may therefore explain the
results of recent empirical studies that have led to similar results.
JEL-Codes: Z11; L11; (follow links to similar papers)
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