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Price determinants and genre effects in the Korean art market: a partial linear analysis of size effect

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Abstract

This paper examines the price determinants of paintings in the Korean art market in the context of a hedonic price regression to investigate whether the hypothesis of the modified unit pricing system holds for the pricing of Korean modern and contemporary paintings. Using Korean auction data, I show that the parametric results provide overwhelming evidence that Korean art pricing does not function in accordance with the modified unit pricing scale. However, I re-examine this hypothesis using a semiparametric partial linear regression that does not require the prespecification of a functional form prior to estimation. Rather, the semiparametric approach allows the data to determine the exact form of the size-price profile. This result confirms that the modified unit pricing system applies to the Korean contemporary and modern painting market.

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Notes

  1. In 2007, the average exchange rate was 1 USD = 1,102 KRW.

  2. This measurement of painting size originated from the Impressionist period. According to Vincent van Gogh’s letter to his brother, Theo van Gogh, on August 21, 1888, Vincent referred to three canvas sizes—15, 25, and 30—for his painting of sunflowers.

  3. This pricing system may be understood as a kind of block pricing in terms that the consumer pays one unit price for units consumed in the first block of output (size less than about 40 hoes) and a different price for units in the second block (size greater than about 40 hoes). However, it is not deterministic nor truly block as are prices of utilities. See Wilson (1993) for a more detailed discussion of block pricing.

  4. For age, the price may reflect the artist’s most creative period or when important contributions to his style of painting were typically made. However, due to the limitation of data on the artist’s age when the painting was executed, I only consider the artist’s age at the time of sale.

  5. In all estimation, I initially included the age-squared variable as considered in Agnello and Pierce (1996) and Worthington and Higgs (2006). However, the coefficient is insignificant and small in magnitude, and thus I deleted it from the regressions.

  6. The coefficients on the zero–1 dummy variables are evaluated by inserting the estimates in the formula 100(eβ − 1). See Halversen and Palmquist (1980) and Agnello and Pierce (1996) for reference.

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Acknowledgments

The author is grateful for the valuable comments of Lawrence White and participants at the seminar.

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  1. Department of Economics, Sogang University, 1 Sinsu-dong, Mapo-gu, Seoul, 121-742, South Korea

    Joonwoo Nahm

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  1. Joonwoo Nahm
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Correspondence to Joonwoo Nahm.

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Nahm, J. Price determinants and genre effects in the Korean art market: a partial linear analysis of size effect. J Cult Econ 34, 281–297 (2010). https://doi.org/10.1007/s10824-010-9126-y

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  • DOI: https://doi.org/10.1007/s10824-010-9126-y

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