The Impact of Death and Bubbles in American Art
Chapter 7 presents a dissection of two important issues affecting the art market and the fate of artists: “a death effect” and “bubbles.” Death of an artist is a guarantee that additional legitimate output will not be forthcoming, the “Coase durable monopoly conjecture.” Evidence indicates that the price path of seventeen artists who died over the sample period rises as the artist approaches death. After death, price may rise or fall with supply and demand, but we find it rises for our contemporary artists. “Bubbles”—rapid price increases—have and do occur in the art market. We find that art price behavior parallel GDP prior to 2008, but rose much faster thereafter. This result, coupled with an increasingly skewed world income distribution and billionaire buying, potentially denotes an “art price bubble.”