Art at auction: price formation and the creation of superstars in the Australian art auction market

Abstract

© Dr. Meaghan Wilson-AnastasiosThis thesis shows that prices generated by the art auction system can be anything but mysterious despite the common perception that art, as a commodity, somehow falls outside the norm compared with other economic systems. Far from being the by-product of an enigmatic process, auction prices evolve directly from the mechanisms that shape the market and the human agents and institutions that dominate the system. Using the non-Indigenous Australian art market as a case study, this thesis offers a new, cross-disciplinary model that draws on economic and art-historical methodologies as a means of examining and explaining price formation within the art auction market. The research presented shows that the Australian auction market is dominated by a very small number of artists who are responsible for generating the lion’s share of revenue. Referencing cultural economic theory, I describe these artists as ‘superstars’. I discuss the superstar effect as it is defined in economic terms and show how it manifests in the art auction record. I map the existence of a superstar class of artists at the high-end of the Australian art auction market and consider the implications of this for art’s investment potential. Most market commentaries focus on the top-end of the market. This study uses as its starting-point a dataset of over 2,500 artists active at all levels of the secondary-market compiled from auction records covering the period 1972-2004, including artists who registered just a single auction appearance. This presents a broad overview of the market that offers new insights into the relationship between levels of professional accomplishment and auction price. Artists’ auction records and biographies are examined in detail in addition to agglomerate data for the market as a whole. This examination presents a picture of the key events, agents and institutions that shaped the auction market in Australia during the ‘boom’ period that commenced in the late 1990s. The premise of the ‘superstar’ artist is perpetuated and enshrined by the way these factors interact with the art auction system and place upward pressure on prices. The model of the art auction market presented in this thesis suggests that the prices it generates can be formed by activities that have little if anything to do with genuine competitive forces. As I will show, this can have implications for the efficiency and sustainability of the market