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Evolution of a dealer trading network and its effects on art auction prices

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  • De Silva, Dakshina G.
  • Gertsberg, Marina
  • Kosmopoulou, Georgia
  • Pownall, Rachel A.J.

Abstract

We use a unique historical data set (1741-1913) of all London-based art auctions to capture the role of information acquisition in the development of a trading network for dealers and its effect on artwork prices. We explore how the network size, depth of interactions, and similarities in art specialization between trading partners influence the decision to form new links. We find that, a larger and deeper trading network exacerbates informational asymmetries among buyers, leading to a price advantage. We show that information transmission through a network of experienced dealers is important in determining the price they pay - a factor that has been overlooked so far in the literature.

Suggested Citation

  • 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).
    • Handle: RePEc:eee:eecrev:v:144:y:2022:i:c:s0014292122000319
    DOI: 10.1016/j.euroecorev.2022.104083
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    Cited by:

    1. Mingyuan Chen & Dakshina De Silva & Aurelie Slechten, 2021. "Director appointments, boardroom networks, and firm environmental performance," Working Papers 332157256, Lancaster University Management School, Economics Department.
    2. Etro, Federico & Stepanova, Elena, 2021. "Art return rates from old master paintings to contemporary art," Journal of Economic Behavior & Organization, Elsevier, vol. 181(C), pages 94-116.
    3. De Silva, Dakshina G. & Kosmopoulou, Georgia & Pownall, Rachel & Press, Robert, 2023. "Surviving in the marketplace: The importance of network connectivity for art dealers," Economics Letters, Elsevier, vol. 231(C).

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    More about this item

    Keywords

    Auctions; Art dealers; Trading networks;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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