The effects of gallery and artist reputation on prices in the primary market for art: a note

Susanne Schönfeld and Andreas Reinstaller ()

Journal of Cultural Economics, 2007, vol. 31, issue 2, pages 143-153

Abstract: This paper advances a decision theoretical foundation for pricing scripts in the primary art market. We argue that while sociological factors play an important role, pricing scripts may well have economic determinants. We use a simple model of product differentiation implementing the undercut proof equilibrium concept to analyse the effects of the gallery’s and the artist’s reputation on the price the gallery charges. The results suggest that prices positively correlate with an artist’s reputation and negatively correlate with a gallery’s reputation. The model may therefore explain similar findings of recent empirical studies on pricing in the primary market for fine art. Copyright Springer Science+Business Media, LLC 2007

Keywords: Pricing scripts; Art galleries; Visual arts; Undercut proof equilibrium; Z11; L11 (search for similar items in EconPapers)

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