Essays on Economics of the Arts
Creators: name: Angelini, Francesco
Publisher: name: IMT Alti Studi Lucca
Year: 2017
Subjects: HB Economic Theory

description: In the recent years, a vast number of economic studies
 focused on the art market and on its development,
 as well as on the artists as agents of a labour
 market with features that are particular of art market.
 However, really few studies analyzed the functioning
 of the art market as a whole with a theoretical
 approach, often considering the artist as nothing
 more than a simple producer of artworks. This
 dissertation aims to enrich the economics literature
 with the above mentioned missing parts.
 In Chapter 2 we build a model for studying the price
 formation in the private art market in a context of
 complete information and full rationality, using a
 game theory approach. In this first part, the key
 variables in this market are the market powers of
 the agents in the market, that define what is the
 channel through which a certain artwork reaches
 the public market. Chapter 3 firstly better defines
 what are the economic and cultural values and how
 their formation works for artworks, and then it introduces
 in the just created framework the effects
 of information asymmetry among the agents operating
 in the market, and behavioural aspects in the
 choices of some of them: besides market powers,
 also information has a key role in the art market,and it mainly depends on artists' characteristics, as
 fame and talent. Chapter 4 empirically investigates
 these artists' characteristics, creating a new measure
 for them, through the use of hedonic regression and
 quantile hedonic regression, finding that this measure
 presents a bimodal distribution in all the specifications
 we implemented, coherently with the superstar
 theory in the art market, and that there exist
 various effects than influence the ranking created
 using our measure.
 Chapter 2 analyses the pricing of artworks just created
 by an artist and sold for the first time in the
 art market, investigating the price formation mechanism
 at work in the private art market. In particular,
 a game theory approach is used to consider the
 possible channels (paths) that a new artwork can
 take to reach a collector or an auction house, assuming
 price-maximizing agents with full information
 on market powers and reserve prices. The study is
 aimed to identify the relationships between the artwork
 prices and the market power of agents operating
 in each channel of the market. What we find
 is that the market power of each of the agents is key
 to identify the market channel that will be preferred
 by the artist and, then, her incentive in creating a
 new artwork. At the same time, the importance of
 art market intermediaries as the galleries in the formation of art prices is attested and their incentives
 to enter and remain in the market are confirmed.
 Chapter 3 aims to explore the role of cultural and
 economic value, and of the information on private
 art market price formation; in this Chapter, we develop
 a bargaining game model in which we explicitly
 consider the effects of these issues. Furthermore,
 we introduce artists' fame and talent as determinants
 of an artwork's cultural and economic
 value. Assuming artists, galleries, and collectors
 have different levels of information on the quality of
 the artworks and on the characteristics of the artists,
 we study the behaviour of these agents and the potential
 emergence of disappointment for the sophisticated
 collectors and undertreatment for the unsophisticated
 ones. Artworks will be treated as credence
 goods, experience goods, or search goods, depending
 on the level of information each agent has
 at his disposal; this influences the way the price is
 formed and how the surplus of the trade is shared
 among the agents in certain particular trade channels.
 In Chapter 4, we aim to empirically analyze those
 characteristics of the artists that influence cultural and economic values, in order to understand how
 the art market considers them in the formation of
 prices. To do so, using a unique hand collected dataset
 from the Artist Re sale Rights (ARR) archives of
 the Societa' Italiana degli Autori ed Editori (SIAE),
 we build a novel index of artists' talent and fame in
 the Italian art market. The distribution of this measure
 and the ranking of the artists' index is analyzed
 in several model specifications, and the dynamics
 of the index is also qualitatively studied. Despite of
 the existence of a price effect, a time effect, and an
 art genre effect, coherently with the superstars theory,
 the bimodality of the distribution is confirmed
 in all our empirical findings.