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Selling Picasso paintings: the efficiency of auction houses

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  • Finn R. Førsund

    ()

  • Roberto Zanola

    ()

Abstract

Previous works applying hedonic price technique to determine the formation of auction prices of objects of art have found no conclusive result about the impact of auction houses on final prices. In these studies the object of art has been the unit, and influence of auction houses is analysed by testing whether auction house impact on price is significant or not within a framework of central tendencies. In order to focus on auction houses as a unit we have applied a benchmarking technique, DEA, developed for efficiency studies. Categorial and continuous variables are used as inputs and auction prices as outputs. Performance indicators are defined and calculated giving an insight into auction house differences impossible to obtain using hedonic price approach.

Suggested Citation

  • Finn R. Førsund & Roberto Zanola, 2001. "Selling Picasso paintings: the efficiency of auction houses," ICER Working Papers 07-2001, ICER - International Centre for Economic Research.
  • Handle: RePEc:icr:wpicer:07-2001
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    References listed on IDEAS

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    4. Per Andersen & Niels Christian Petersen, 1993. "A Procedure for Ranking Efficient Units in Data Envelopment Analysis," Management Science, INFORMS, pages 1261-1264.
    5. Finn R. Forsund, 2002. "Categorical Variables in DEA," International Journal of Business and Economics, College of Business and College of Finance, Feng Chia University, Taichung, Taiwan, pages 33-44.
    6. Afriat, Sidney N, 1972. "Efficiency Estimation of Production Function," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 13(3), pages 568-598, October.
    7. Wagner A. Kamakura, 1988. "Note---A Note on "The Use of Categorical Variables in Data Envelopment Analysis"," Management Science, INFORMS, pages 1273-1276.
    8. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
    9. Olivier Chanel & Louis-André Gérard-Varet & Victor Ginsburgh, 1996. "The relevance of hedonic price indices," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, pages 1-24.
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    11. Luc Renneboog & Tom Van Houtte, 2000. "From realism to surrealism: investing in Belgian art," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, pages 69-106.
    12. Finn Førsund & Nikias Sarafoglou, 2002. "On the Origins of Data Envelopment Analysis," Journal of Productivity Analysis, Springer, pages 23-40.
    13. Pesando, James E, 1993. "Art as an Investment: The Market for Modern Prints," American Economic Review, American Economic Association, pages 1075-1089.
    14. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
    15. Combris, Pierre & Lecocq, Sebastien & Visser, Michael, 1997. "Estimation for a Hedonic Price Equation for Bordeaux Wine: Does Quality Matter?," Economic Journal, Royal Economic Society, vol. 107(441), pages 390-402, March.
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    18. Meeusen, Wim & van den Broeck, Julien, 1977. "Efficiency Estimation from Cobb-Douglas Production Functions with Composed Error," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 18(2), pages 435-444, June.
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    Cited by:

    1. Finn R. Forsund, 2002. "Categorical Variables in DEA," International Journal of Business and Economics, College of Business and College of Finance, Feng Chia University, Taichung, Taiwan, pages 33-44.
    2. Abderazak Bakhouche & Ludovic P.J. Thebault, 2011. "What Determines Cézanne’S Art Pricing? A Hedonic Regression Method," Analele Stiintifice ale Universitatii "Alexandru Ioan Cuza" din Iasi - Stiinte Economice, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, vol. 58, pages 515-532, november.
    3. Finn R. FF8rsund & Roberto Zanola, 2002. "The performance of auction houses selling Picasso Prints," ICER Working Papers 30-2002, ICER - International Centre for Economic Research.
    4. Marco-Serrano, Francisco & Rausell-Köster, Pau, 2006. "Productivity Analysis in the Spanish Cultural and Leisure Industry: A Regional Perspective/Análisis de la productividad en el sector de la cultura y el ocio español: una perspectiva regional," Estudios de Economía Aplicada, Estudios de Economía Aplicada, pages 635(24á)-63.
    5. Finn Forsund & Roberto Zanola, 2002. "The performance of auction houses selling Picasso prints," Others 0210003, EconWPA.

    More about this item

    Keywords

    painting; auction house; hedonic price; DEA; efficiency;

    JEL classification:

    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling
    • D2 - Microeconomics - - Production and Organizations
    • Z1 - Other Special Topics - - Cultural Economics

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