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The Economics of American ArtIssues, Artists and Market Institutions$
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Robert B. Ekelund Jr., John D. Jackson, and Robert D. Tollison

Print publication date: 2017

Print ISBN-13: 9780190657895

Published to Oxford Scholarship Online: July 2017

DOI: 10.1093/oso/9780190657895.001.0001

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American Art, “Experts,” and Auction Institutions

American Art, “Experts,” and Auction Institutions

(p.104) Chapter 4 American Art, “Experts,” and Auction Institutions
The Economics of American Art

Robert B. Ekelund

John D. Jackson

Robert D. Tollison

Oxford University Press

Estimates made by “experts” regarding the value of a painting to be offered at auction are evaluated as to whether or not they provide a “fair” or “unbiased” range. Using a sample of eighty American artists over the period 1987–2013, evidence is found that in general art prices are underestimated, but that very high priced art may be overestimated in the interests of profit-maximizing auction houses; we also find that the higher the low estimate, the less likely a painting is to sell, and the wider the range between high and low estimated, the more likely it is to sell; that if a painting does not sell on first offer, its hammer price will be about 60 percent lower if it sells on the next offering (it is “burned”); and that the rapid rise in buyer’s premiums charged by auction houses has had, in combination with other factors, a reduction in auction house revenues.

Keywords:   auction, American art, art auction, hammer price, auction house

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