Analyzing the market of works of contemporary fine arts: An exploratory study

Abstract

In this study a simple economic model is developed for analyzing the market of works of contemporary fine arts(l). So far only a few authors(2) have tried to analyze supply of and the demand for works of fine arts in the literature. Moreover, in most of these studies only particular aspects are investigated, and the interaction between both sides of the market are rarely analyzed. The main argument put forward for this neglect is that the market for fine arts is something very special, because of the characteristics of each piece of work (i.e., its uniqueness, individuality and lack of homogeneity severely restricting the substitution between them). Furthermore, little empirical work has been done on the market for contemporary fine arts(3) -which is not surprising when only special aspects are dealt with in the literature.The paper develops a simple economic model of the supply and demand for works of modern fine arts. The model will be used to explain the prices of representative works of the top one hundred contemporary artists in each year of the seventies.(4) The basic idea underlying the model refers to the general behavioral approach of economists, i.e., the search for similarities in the behavior of the various actors. The model is specified in the second section. The results of the econometric estimates for the period 1971 to 1978 are presented next, as well as the forecasts of the esthetic and economic evaluation of the work of the top hundred modern artists in 1979. A summary is then presented and some conclusions drawn. Supply and Demand for Works of Contemporary Fine ArtsThe starting point of our analysis is the assumption that the market for works of modern fine arts is competitive, in which supply and demand determine the Page 41

Two games in town: a comparison of dealer and auction prices in contemporary visual arts markets

“…Schneider and Pommerehne (1983) were the first to use CKK reputation points as a proxy for the aesthetic valuation of artworks. With regressions for the years 1971-1978 they found that aesthetic value has a significant influence on the price of artworks.…”

Towards Data Oriented Analysis of the Art Market: Survey and Outlook

“…Early work of Schneider and Pommerehne (1983) on contemporary fi ne arts describes some assumpti ons regarding the market. For example, the art market is competi ti ve only to some degree.…”

Trusting Constitutions

“…E.g. Matsusaka (1995) orRueben (1999) for general government expenditure, orSanterre (1989; for public education expenditures.6 See e.g Schneider and Pommerehne (1983). andFeld and Kirchgässner (1999) for general government expenditures.…”