2011
Abstract:
The art market is famous for auctions at Sotheby’s
and Christie’s, where works by well-known artists
sell for stratospheric prices. Researchers often
have concluded that auction prices are not driven
by economic fundamentals; that they reflect some
degree of unpredictable or irrational behavior
by consumers. In this paper, we ask whether the
broader retail art market, which is composed
mostly of small galleries, is more consistent
with standard economic models. In particular,
we examine whether the location patterns of
Manhattan art galleries exhibit agglomeration
economies typical of retail markets. We also
look at the correlation between gallery clusters
and neighborhood economic and demographic
characteristics, and whether location affects
gallery longevity.
