Price and Death
How does an artistâ€™s death impact on the price of his or her works of art? We investigate this question in an infinite-horizon dynamic general equilibrium setting. Employing the open-loop Stackelberg equilibrium concept to describe the interactive behaviour of collectors and artists, we find that the art price remains at some well-defined "pseudo-competitive" level as long as the artist is alive. Only when the artist unexpectedly dies, the price increases on impact. This so-called death eﬀect varies negatively with the artistâ€™s age at death. If it is well known that an artist is ailing from some terminal illness and his or her death thus does not come as a surprise, the price of the ailing artistâ€™s work increases when the news of the ailment is divulged; the price immediately jumps to the level which will prevail at the time when the artist dies.
|Date of creation:||2008|
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