Asymmetries in Art Markets

Abstract

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Seller-buyer networks in NFT art are driven by preferential ties

“…The attribution, provenance, authenticity, and even copyright of an artwork is often unclear, and this plays a significant role in its ultimate pricing (Cooper, 2018). The division between primary and secondary markets creates a further informational barrier, in the context of a general difficulty in estimating the quality of intrinsically unique goods (Gertsberg, 2019), and lacking regulatory frameworks Mosna (2022). What is more, price data in the art market is notoriously lacking, hindering the systematic study of artwork prices and pricing over time (van Miegroet et al, 2019).…”

“…Information asymmetries and high uncertainty translate into high transaction costs paid to mediators, they inflate the role of expert judgements and of one's embeddedness in existing networks. In the art market few, powerful and established intermediaries can easily marginalize anyone with reduced access to information (Gertsberg, 2019). It is thus that the reliance on personal and institutional social networks as arbiter for taste and value became commonplace in many cultural and creative sectors, well beyond the fine arts (Godart and Mears, 2009;Ebbers and Wijnberg, 2010;Williams et al, 2019;Juhász et al, 2020).…”

“…"Payoffs in these markets are disproportionate to the level of talent and profits are highly rank-dependent. As a result, a small number of individuals absorb the largest portion of revenues" (Gertsberg, 2019). This has a direct consequence on the career prospects of artists.…”

“…As a result, uncertainty reigns. Both sellers and buyers are at a disadvantage, whereas intermediaries retain substantial brokering power (Gertsberg, 2019). These include dealers and galleries, auction houses, experts, curators, and cultural institutions.…”