Presentation IGIB
Transcript of Presentation IGIB
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Art Markets
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Art Markets
Definition
The buying and selling of highquality oil paintings is truly aninternational activity. Buyers andsellers from all over the worldconvene at auction sales, galleries,and private homes to exchange
high quality works of art.
A result of complexinteractions than can usuallynot be explained by economictheory.
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Art Markets
Main Characteristics
Price
Works priced from $50,000and up to $1-6M.
The bulk of the works sellfrom $50,000 to $500,000.
Only a few $1-2M paintings ayear are sold.
The $3M, $4M and $5M sales
are works by artists likeRembrandt. Spectacularpaintings like these only appearon the market every few years.
P
roduct
The works are transportableoil paintings on canvas.
Sometimes, works are paintedon wood, as in old, Europeanaltarpieces.
Occasionally, very old worksmay have been done on stucco,and new works may have usedsome form of plastic.
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Art Markets
Main Characteristics
Exists only in cities with financialand cultural capital that attractsongoing concentration of marketactivity
A network of international economicactivity in major world cities: NewYork, London, Paris, Berlin, Geneva,Milan, Tokyo, Hong Kong
The U.S. leads the world market forcontemporary art with 50% of sales
New emerging art markets: China,India, Russia, and the Middle East
Although auction houses have oftendominated the headlines, dealers:52% share of global sales; art fairsare emerging as an increasinglyimportant method of selling.
Current art market is being drivenby influx of a new demographic ofyounger buyers and collectors
Far less sensitive to economic crisesand geopolitical events than otherassets long term stability
Considerably less volatile than thestock market
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A
rt Markets
Major Actors, Institutions and Nodes in the Artworld Economic
Network Artists
Dealers and Galleries
Collectors, Buyers (individual, corporate, institutional)
Auction houses
Art consultants and Advisors
Art investment services and funds
Museums and all museum professionals
Art media: press, magazines and journals, websites
Art Fairs Biennials, international art forums like Documenta
Art market services (e.g., Artnet, information aggregators, databases)
Main Characteristics
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Art Markets
Art prices develop completely or largely independently of the stock
markets or other investments such as bonds or commodities
There are many factors which determine the value of an artists work but the
main influence is the career progression of the artist
Price Index:
Main Characteristics
Art Market Analysis: Influences on Value
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Art Markets
Art Market Trends in 2008
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Art Markets
Art Market Trends in 2008
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Art Markets
Art Market Trends in 2008
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Art Markets
Art Market Trends in 2008
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Art Markets
The art market heavyweights in 2008: top 10 artists
Pablo
Picasso
Pablo
Picasso
Francis BaconFrancis Bacon
Andy WarholAndy Warhol
Damien HirstDamien Hirst
Claude MonetClaude Monet
Alberto GiacomettiAlberto Giacometti
Gerhard RichterGerhard Richter
Edgar DegasEdgar Degas
Lucio FontanaLucio Fontana
Yves KleinYves Klein
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Art Markets
Summary
Art popular marker of wealth and social status in many cultures
The most important art markets:
New York
LondonParis
Fine art is in fact a very stable investment
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ArtAuctions
ABSTRACT
I. Introduction1. Definition - Auction
2. Overview about Auctions
2.1. English auction
2.2. Dutch auction
2.3. Auction formats (Open outcry; Sealed bid auction)2.4. Types of valuation
II. How works an english auction
(Auction houses)
III. Summary
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ArtAuctions
IntroductionDefinition - Auctions
An auction is a market institution with precise rules
fof determining the price paid for an object and how
it is allocated
Auctions participants who make offers to buy
are called bidders
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ArtAuctions
Introcuction - The 4 common Auctions
English auction
First - price sealed bid auction
Dutch auction
Second - price sealed bid auction(Vickrey)
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ArtAuctions
English AUCTION
price is successively raised until only one bidder remains
Examples:
antiques, art and wine
fish in Boston
used cars in the United States
houses in Australia
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ArtAuctions
Dutch AUCTION
auctioneer calls an initial high price and then lowers
the price until one bidder accepts the current price
Examples:
cut flowers in the Netherlands
fish in Israel, Spain
tobacco in Canada
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ArtAuctions
Auction Formats Open outcry
Ascending Auctions (English)
auctioneer announces ever increasing prices
to solicit bids, continues until one person left in
Descending Auctions (Dutch)
auctioneer announces decreasing prices until
someone puts up their hand
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ArtAuctions
Auction Formats Sealed bid auctions
everyone puts bids in evelopes and gives to seller
at the same time
First price auction, Second Price auction
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ArtAuctions
First-Price Sealed Bid Auction
potential buyers submit sealed bids and the highestbidder is awarded the item for the price he bid
Examples:
Mineral rights to U.S. government-owned land Real estate
Government procurement contracts
the item is sold to the person with the highest
valuation
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ArtAuctions
Second-Price Sealed-Bid Auction
the highest bidder wins the item but pays a price equal
not to his own bid but to the second-highest bid
the price paid is related to the reservation price of the
second highest bidder
in theory it should work, in practice have had problems
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ArtAuctions
Types of valuation Private Value Auctions
each bidder knows his/ her own valuation
my valuation DOES NOT DEPEND
on your information
When is an auction likely NOT to have purely
private values?
resale possiblesome bidders are experts
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ArtAuctions
Type of valuation Common Value Auctions
All bidders have the same valuation but they
dont know what it is
My valuation DOES DEPEND on
your information
Most real-world auctions have a mixture
of private and common values
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ArtAuctions
Winner s Curse
Is it always good to win the
auction?
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aArt Markets & ArtAuctions
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ArtAuctions
5. How works an English auction - Auction houses
Rules are invented and refined over 2 centuries
by english auction houses
hammer price
reserve price = price which the seller genrally sets
= minimum acceptable bid
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ArtAuctions
5. How works an English auction - Auction houses
[] auctioneers at Chriesties are gentelmen who try to act
like businessmen, while the auctioneers at Sothebys are
businessmen who try to act like gentlemen.
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ArtAuctions
How works an English auction - Auction houses
Auctioneer
acts on behalf of the seller
receives compensations from both- seller and buyer-
for items that are sold
buyer s premium
seller s commission
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ArtAuctions
How works an English auction - Auction houses
buyer s premium seller s commission
paid to the auctioneer
by the buyer by the seller
10 % of sale price % of sale price
amount is not negotiable varies with the type of item
(5- 15%)
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ArtAuctions
How works an English auction - Auction houses
item unsold = buyer s premium / seller s commission
to bears some of cost of auctioning
auctioneer charge the seller a fee
on unsold items
% of the reserve price
set by the seller
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ArtAuctions
Summary
! Dont forget the winner's curse
! Auctions are a way to discover the right price
! In second-price private-value auctions, you should bid
your true valuation
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ArtAuctions
Summary
! auction design influences behavior and performance:
more bidders increases revenue
first-price auctions may increase revenue when
bidders are risk-averse.
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AArt auctions
Summar
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