Abstract
We show the value of expertise during the evolution of a market characterized by asymmetric information. Using a unique historical data set, we show how market dynamics encourage
entrants. Our results provide evidence that better informed dealers pay about 24% more for an
artwork of the same quality than less informed dealers. Additionally, our results indicate that
informed dealers are more likely to survive in the market. Our evidence supports the conjecture
that, in common value auctions, when information asymmetries are present, dealers with better
information benefit. These results have important implications for maintaining and sustaining
competitive advantage.
entrants. Our results provide evidence that better informed dealers pay about 24% more for an
artwork of the same quality than less informed dealers. Additionally, our results indicate that
informed dealers are more likely to survive in the market. Our evidence supports the conjecture
that, in common value auctions, when information asymmetries are present, dealers with better
information benefit. These results have important implications for maintaining and sustaining
competitive advantage.
| Original language | English |
|---|---|
| Publisher | Lancaster University Management School |
| Pages | 1-51 |
| Number of pages | 38 |
| Publication status | Published - 9 Nov 2016 |
Publication series
| Series | Economics Working Paper Series |
|---|---|
| Number | 017 |
| Volume | 2016 |
JEL classifications
- c57 - Econometrics of Games and Auctions
- d44 - Auctions
- z11 - Cultural Economics: Economics of the Arts and Literature
- d47 - Market Design