The effects of gallery and artist reputation on prices in the primary market for art: a note

Susanne Schönfeld, Andreas Reinstaller

Publication: Working/Discussion PaperWU Working Paper

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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. (author's abstract)
Original languageEnglish
Place of PublicationVienna
PublisherInst. für Volkswirtschaftstheorie und -politik, WU Vienna University of Economics and Business
Publication statusPublished - 2005

Publication series

NameDepartment of Economics Working Paper Series
No.90

WU Working Paper Series

  • Department of Economics Working Paper Series

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