Art-forArt's-Sake: A Long-Term Strategy for Stable Market Growth and Price Increases

• In Event: 2124 - Economic Sociology: Maintaining Markets

Abstract

The current study is situated in the contemporary art market as a strategic research site for extending theory to incorporate a mechanism underlying market selection and valuations, whereby greater returns stem from social constraints on profit-seeking. Galleries select artists, generate demand, and influence subsequent valuations. However, paradoxically, the economic value of the art is underlined by galleries’ denial that its value can be determine by the market, a willingness-to-pay is not considered an adequate measure. Price is determined through arcane conventions, and acts as a brake on the throttle of run-away marketization. This paper presents data on how galleries reduce uncertainty around exchange by demanding collectors commit to art-world norms. Similar social factors are found in other settings as well, ranging from venture-capital funding of early-stage startups, in private equity in the issuance of IPOs, to professional services, as well as luxury brands.

Author

• James Whitcomb Riley, Massachusetts Institute of Technology