Is the Art Market More Bourgeois than Bohemian?

65 Pages Posted: 29 Jul 2011  

Jenny Schuetz

Board of Governors of the Federal Reserve System

Elizabeth Currid

University of Southern California

Richard K. Green

University of Southern California - Lusk Center for Real Estate

Multiple version iconThere are 2 versions of this paper

Date Written: July 27, 2011

Abstract

The art market is famous – or notorious – for auctions at Sotheby’s and Christie’s at which works by well-known artists are sold for stratospheric prices. Researchers have argued that such prices are volatile and unpredictable based on economic fundamentals, implying that at least some segment of the art market behaves irrationally. In this paper, we examine whether the broader art market, composed mostly of small galleries, is more consistent with standard economic models. In particular, we ask whether the location patterns of art galleries exhibit behavior consistent with agglomeration economies, as would be predicted for retail firms selling highly differentiated and expensive products. Using a newly developed database, we find strong evidence of agglomeration economies among Manhattan art galleries from 1970-2003. Galleries locate in highly concentrated spatial clusters, and these clusters are more likely to occur in neighborhoods with affluent households and older, more expensive housing, consistent with locating near potential consumers. We find no evidence that galleries locate in cheap, “bohemian” neighborhoods. The highest quality tier of the art market, which has been most widely studied, contains a relatively small share of gallery establishments, although these “star” galleries have a longer average lifespan than non-star galleries. Locating near other galleries also increases the longevity of firms and establishments.

Keywords: agglomeration economies, retail location, cultural industries, art galleries

JEL Classification: L81, R12, R33

Suggested Citation

Schuetz, Jenny and Currid, Elizabeth and Green, Richard K., Is the Art Market More Bourgeois than Bohemian? (July 27, 2011). Available at SSRN: https://ssrn.com/abstract=1896514 or http://dx.doi.org/10.2139/ssrn.1896514

Jenny Schuetz (Contact Author)

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Elizabeth Currid

University of Southern California ( email )

Los Angeles, CA 90089
United States

Richard K. Green

University of Southern California - Lusk Center for Real Estate ( email )

Los Angeles, CA 90089
United States

Paper statistics

Downloads
84
Rank
246,636
Abstract Views
732