THE AUCTION MARKET FOR MODERN PRINTS: CONFIRMATIONS, CONTRADICTIONS, AND NEW PUZZLES

Authors

  • JAMES E. PESANDO,

    1. Pesando: Professor of Economics and Research Associate, Institute for Policy Analysis, University of Toronto, 140 St. George Street, Suite 707, Toronto, Ontario, Canada M5S 3G6. Phone (416) 978-8625, Fax (416) 978-5519, E-mail pesando@chass.utoronto.ca
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      We thank Simiao Zhou, Lindsay Eng, and Audrey Wi for excellent research assistance and two anonymous referees for comments that substantially improved the paper.

  • PAULINE M. SHUM

    1. Shum: Associate Professor of Finance, Schulich School of Business, York University, and Research Associate, Institute for Policy Analysis, University of Toronto, 140 St. George Street, Suite 707, Toronto, Ontario, Canada M5S 3G6. Phone (416) 736-2100 ext 66430, Fax (416) 736-5687, E-mail pshum@schulich.yorku.ca
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    • *

      We thank Simiao Zhou, Lindsay Eng, and Audrey Wi for excellent research assistance and two anonymous referees for comments that substantially improved the paper.


Abstract

Using a large data set with 80,214 repeat sales, we find that the real return on a diversified portfolio of modern prints sold at auctions worldwide averaged a modest 1.51% during the period 1977–2004. We address several issues regarding the performance of modern prints as investments: the selection bias arising from the self-interest of auction houses; the impact of an ever-expanding universe of auction houses on investment returns; the “masterpiece” effect, or whether more expensive works of art outperform the market as a whole; and the differences in returns that arise due to random fluctuations in collector tastes. (JEL Z11, G11, G14)

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