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Two games in town: a comparison of dealer and auction prices in contemporary visual arts markets


The article tests a couple of hypotheses relating to markets where demand is not taken as a given, but subject to sophisticated and encompassing price-building strategies. The study uses a data set that provides quoted dealer prices for medium-sized works of 100 leading visual artists from 1970 to 2004. These data are compared with auction price results for works by the same artists. The study reports significant discrepancies with respect to the relationship between the age of artists and prices paid for their works in the two markets, and with respect to general price developments in the two markets as measured by indices.

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  1. One of Velthuis’ interview partners remarked with respect to Arnold Glimcher, the founder of Pace Gallery: “Buying from Pace is rather like membership in a club. Glimcher has this group of subscribers who are committed to his aesthetic, and they buy works by each of his stable of artists.” (Velthuis 2005, p. 17).

  2. A formal model which is able to capture the peculiarity of this club formation uses graph-theoretic form (Mirowski 1991, pp. 572). It assumes that market relations between buyers and sellers are not of the anonymous and fleeting nature as are transactions in a supermarket. Rather, every single exchange presupposes a social basis, i.e., a well-defined relation between the participants of a connection. All the agents in a market are nodes in a network connected by ongoing relationships between individuals or organizations that know each other well and have invested considerable trust in each other.

  3. In the primary market, living artists sell their works to dealers or collectors. In secondary markets, dealers sell works by living and deceased artists. In tertiary markets, owners sell works through auctions. For a description of the market hierarchy see Throsby (1994, p. 5) who limits the tertiary market to major international auction houses.

  4. For current overviews on this topic, see Burton and Jacobsen (1999) or Ginsburgh et al. (2006).

  5. The index was initiated in 1970 by Willi Bongard, a Cologne-born stock exchange analyst, journalist, publisher, and active participant of the “Fluxus” movement. It is published every year in the November issue of Capital, the leading German business monthly. Since 1985, the survey has been continued by his widow, Linde Rohr-Bongard. All the rankings were republished in the 30th edition of the survey. See Rohr-Bongard (2001).

  6. The reputation points of the index are awarded for appearances in international exhibitions and reviews, thus the sample of artists is international. Yet, there is a clear bias toward artists who originate in German-speaking art circuits. However, the bias is inconsequential for the questions under study here.

  7. The outlier effect has been demonstrated for prices paid for works by Marc Chagall in various media. See Holub et al. (1993).

  8. On the problem of determining the unknown volume of transactions in the dealer market, see the first paragraph of Sect. 7.

  9. There are no price quotes for the year 1970. In 1982 and 1985, CKK was not published. In 1980, 1984, and 1987, the top 100 focused on young artists under the age of 40. The aggregate prices should show a lower level for these years. In 1988, 1993, and 1999, a so-called “rejuvenation” was undertaken, shortening the time span for the accumulation of points in order to give younger artists a better chance to move to the top. Since this change favored younger artists, a downward shift of the price level must be assumed in these years.

  10. Just before this article went into print, Schönfeld and Reinstaller (2007) published a model which suggests reasons for price restraint on the part of galleries with higher reputation, using the data on gallery prices in Beckert and Rössel as evidence. Given the fact that these data represent price lists from galleries in two cities only, and that the estimated coefficient is not significant, such interpretation is doubtful.

  11. We left out the years 1970 and 1980 due to small sample sizes of only five and two observations, respectively.

  12. The anomalies in the price development of the dealer market result from the peculiarities of the CKK mentioned in footnote 9.

  13. We ignore the indications in the data that point to a new art boom starting around 2004.


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The authors would like to thank Ariane Berthoin Antal, Bernd Frick, Felix Oberholzer-Gee, and two anonymous referees for their comments and remarks.

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Correspondence to Michael Hutter.

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Hutter, M., Knebel, C., Pietzner, G. et al. Two games in town: a comparison of dealer and auction prices in contemporary visual arts markets. J Cult Econ 31, 247–261 (2007).

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  • Markets for visual art
  • Dealer and auction market price indices
  • Valuation
  • Pricing process

JEL Classification

  • D44
  • Z11