Are auction revenues affected by rising art buyers’ premia? The case of early American art |
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Authors: | Seth C Anderson John D Jackson Robert D Tollison |
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Institution: | 1. Tuskegee University, 257 Belmonte Dr, Auburn, AL 36830-1281, USA;2. College of Liberal Arts, Auburn University, Auburn, AL 36840, USA;3. Department of Economics, Clemson University, Clemson, SC 29631, USA |
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Abstract: | The steady rise in the premiums charged to art buyers at auction (above hammer price) has been underway since 1992. This article, using a stable and bounded sample of repeat purchase of American works created before 1950, reveals that this tact has reduced hammer prices for that art. However, renewed and hyper-competitive efforts to bring more and higher quality art to market by the two main houses, Sotheby’s and Christie’s, have resulted in general profitability. Nevertheless, we calculate that a rise in buyers’ premia at Sotheby’s, a publically traded company, has reduced revenues and profits below their potential in the absence of such increases. |
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Keywords: | art auctions buyer’s premium art auction revenues auction house profitability |
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