Evolution of a Dealer Trading Network and its Effects on Art Auction Prices

Dakshina De Silva; Marina Gertsberg; Georgia Kosmopoulou; Rachel A.J. Pownall

doi:10.1016/j.euroecorev.2022.104083

Evolution of a Dealer Trading Network and its Effects on Art Auction Prices

Dakshina De Silva^*, Marina Gertsberg, Georgia Kosmopoulou, Rachel A.J. Pownall

^*Corresponding author for this work

Research output: Contribution to journal › Article › Academic › peer-review

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.

Original language	English
Article number	104083
Number of pages	30
Journal	European Economic Review
Volume	144
DOIs	https://doi.org/10.1016/j.euroecorev.2022.104083
Publication status	Published - May 2022

JEL classifications

l14 - "Transactional Relationships; Contracts and Reputation; Networks"
d82 - "Asymmetric and Private Information; Mechanism Design"
d44 - Auctions

Keywords

art dealers
trading networks
1ST-PRICE
WINE
Art dealers
Trading networks
CONSEQUENCES
Auctions
MODEL

Access to Document

10.1016/j.euroecorev.2022.104083Licence: CC BY-NC-ND

Cite this

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title = "Evolution of a Dealer Trading Network and its Effects on Art Auction Prices",

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.",

keywords = "art dealers, trading networks, 1ST-PRICE, WINE, Art dealers, Trading networks, CONSEQUENCES, Auctions, MODEL",

author = "{De Silva}, Dakshina and Marina Gertsberg and Georgia Kosmopoulou and Pownall, {Rachel A.J.}",

note = "data source: Graves Auction sales prices",

year = "2022",

month = may,

doi = "10.1016/j.euroecorev.2022.104083",

language = "English",

volume = "144",

journal = "European Economic Review",

issn = "0014-2921",

publisher = "Elsevier Science",

}

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T1 - Evolution of a Dealer Trading Network and its Effects on Art Auction Prices

AU - De Silva, Dakshina

AU - Gertsberg, Marina

AU - Kosmopoulou, Georgia

AU - Pownall, Rachel A.J.

N1 - data source: Graves Auction sales prices

PY - 2022/5

Y1 - 2022/5

N2 - 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.

AB - 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.

KW - art dealers

KW - trading networks

KW - 1ST-PRICE

KW - WINE

KW - Art dealers

KW - Trading networks

KW - CONSEQUENCES

KW - Auctions

KW - MODEL

U2 - 10.1016/j.euroecorev.2022.104083

DO - 10.1016/j.euroecorev.2022.104083

M3 - Article

SN - 0014-2921

VL - 144

JO - European Economic Review

JF - European Economic Review

M1 - 104083

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