Market Evolution of Art Dealers
51 Pages Posted: 9 Nov 2016 Last revised: 30 Aug 2017
Date Written: August 28, 2017
Using a unique historical data set, we show the value of expertise and reputation during the evolution of the art market. First, we illustrate how market dynamics encourage the entry of dealers with heterogeneous characteristics. Second, our results provide evidence that relatively larger dealers pay about 21% more for an artwork of the same quality than smaller dealers as a result of their accumulated experience and reputation. Third, our results indicate that larger dealers are more likely to survive in the market. Our evidence outlines the importance of the accumulation of market power in an emerging market characterized by uncertainty and heterogeneity. These results have important implications for maintaining and sustaining competitive advantage.
Keywords: Auctions, Art Dealers, Market Evolution, Reputation, Experts
JEL Classification: L11, D44, Z11, D47
Suggested Citation: Suggested Citation