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Market Evolution, Bidding Strategies, and Survival of Art Dealers

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Listed:
  • Dakshina Garfield De Silva
  • Marina Gertsberg
  • Rachel Pownall

Abstract

We show the value of expertise during the evolution of a market characterized by asymmetric information. Using a unique historical data set, we show how market dynamics encourage entrants. Our results provide evidence that better informed dealers pay about 24% more for an artwork of the same quality than less informed dealers. Additionally, our results indicate that informed dealers are more likely to survive in the market. Our evidence supports the conjecture that, in common value auctions, when information asymmetries are present, dealers with better information benefit. These results have important implications for maintaining and sustaining competitive advantage.

Suggested Citation

  • Dakshina Garfield De Silva & Marina Gertsberg & Rachel Pownall, 2016. "Market Evolution, Bidding Strategies, and Survival of Art Dealers," Working Papers 138739557, Lancaster University Management School, Economics Department.
    • Handle: RePEc:lan:wpaper:138739557
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    File URL: http://www.lancaster.ac.uk/media/lancaster-university/content-assets/documents/lums/economics/working-papers/LancasterWP2016_017.pdf
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    References listed on IDEAS

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    Cited by:

    1. Dakshina Garfield De Silva & Marina Gertsberg & Georgia Kosmopoulou & Rachel Pownall, 2017. "Dealer Networks in the World of Art," Working Papers 198144199, Lancaster University Management School, Economics Department.
    2. De Silva, Dakshina G. & Gertsberg, Marina & Kosmopoulou, Georgia & Pownall, Rachel A.J., 2022. "Evolution of a dealer trading network and its effects on art auction prices," European Economic Review, Elsevier, vol. 144(C).
    3. Giovanni Colavizza, 2022. "Seller-buyer networks in NFT art are driven by preferential ties," Papers 2210.04339, arXiv.org, revised Nov 2022.

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    More about this item

    Keywords

    Auctions; Bidding; Art Dealers; Market Evolution; Common value;
    All these keywords.

    JEL classification:

    • C57 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Econometrics of Games and Auctions
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • Z11 - Other Special Topics - - Cultural Economics - - - Economics of the Arts and Literature
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design

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