Pricing of Collectibles: Baedeker Guidebooks

Abstract

We analyze the prices of Baedeker guidebooks issued between 1828 and 1945 in the English, French and German languages. We compile a repeat sales regression index of eBay hammer prices, which reveals a common factor in Baedeker guidebook prices. We find mixed evidence on the underperformance of masterpieces (defined as the most expensive guidebooks). No significant difference is found between the average returns of masters and those of non-masters; however, under a five-factor asset-pricing model consisting of Carhart’s four factors and the Pástor-Stambaugh liquidity factor, only masterpieces exhibit significant underperformance. The average price levels of the US, UK and Continental European Baedeker markets do not differ significantly, indicating that the law of one price cannot be rejected. The Baedeker market posts significant negative abnormal returns between 2005 and 2009; however, this result is not found for returns of German-language and non-master guidebooks.

Keywords: Baedeker, repeat sales regression, collectibles, asset pricing

JEL Classification: D46, G12