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Art Auctions and Art Investment in the Golden Age of British Painting

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  • Federico Etro
  • Elena Stepanova

Abstract

We analyze the evolution of the price of paintings in London auctions with a unique dataset of over 200,000 sales in the period 1780-1840. We build a price index for the representative painting through hedonic regressions controlling for the characteristics of auctions and paintings and for the artists' fixed effects. The emergence of an efficient secondary art market was an important opportunity for portfolio diversification. Estimating a CAPM model for art investment suggests that British paintings could deliver a higher return compared to imported paintings and an attractive source of diversification relative to the contemporary stock market. This contributed to increase demand for British art and, possibly, to promote the innovations of its Golden Age. While the representative painting of the British school was initially undervalued, new British painters reached foreign prices by the beginning of 1800s.
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Suggested Citation

  • Federico Etro & Elena Stepanova, 2017. "Art Auctions and Art Investment in the Golden Age of British Painting," Scottish Journal of Political Economy, Scottish Economic Society, vol. 64(2), pages 191-225, May.
  • Handle: RePEc:bla:scotjp:v:64:y:2017:i:2:p:191-225
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    File URL: http://hdl.handle.net/10.1111/sjpe.12122
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    1. Douglas Hodgson & Keith Vorkink, 2004. "Asset pricing theory and the valuation of Canadian paintings," Canadian Journal of Economics, Canadian Economics Association, vol. 37(3), pages 629-655, August.
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    Cited by:

    1. Federico Etro & Silvia Marchesi & Elena Stepanova, 2018. "Liberalizing Art. Evidence on the Impressionists at the end of the Paris Salon," LEM Papers Series 2018/25, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    2. repec:cup:jechis:v:78:y:2018:i:02:p:500-538_00 is not listed on IDEAS
    3. Etro, Federico, 2018. "The Economics of Renaissance Art," The Journal of Economic History, Cambridge University Press, vol. 78(2), pages 500-538, June.
    4. Federico Etro & Elena Stepanova, 2018. "Power-Laws in Art. From Renaissance to Contemporary Art," Working Papers - Economics wp2018_20.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.

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