Private Pricing in the Art Market

Abstract

This note investigates price-formation mechanisms at work in the private art market. An analysis is provided on pricing of new artwork for the first sale. In a model with five different types of agents using a bargaining game approach, the artist's preferred market channel is identified. The bargaining power of each agent emerges as the key element. This setting is also an ideal framework to test public interventions to support one or more agents and channels in the art market, such as Artist Re-sale Rights.

Keywords: bargaining, pricing, cultural economics, art market

JEL Classification: C78, L11, Z11