Art world economics
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Art world economics is a relatively unexplored area of financial exchange that exists at the edges of the regular financial industry. Investment in art has been an accepted form of deposit investment for several decades such as the purchase of works by Matisse, Van Gogh and Picasso. However these works only have an assured value as long as there is a restricted supply of works on the open market - i.e. the artist is dead or producing small numbers of works and that the authenticity of works can be verified by a small number of sources. In the case of contemporary artists it is the interest of collectors and therefore dealers to ensure a tightly controlled line of supply.
The intricacies of art world economics were exposed by the suit of the family of Mark Rothko against the Marlborough Fine Art Gallery brought during the 1970s. In an action known as the Rothko Case, it was determined that Marlborough had knowingly manipulated their management of Rothko's works to maintain a higher sale price after his death, to the detriment of Rothko's family's interest in his estate.
The art market was hit by the 2008 financial crash; sales were down about 41 per cent by 2009, compared with a market peak of almost $66bn in 2007. Contemporary art was particularly badly hit, with sales in that category plunging almost 60 per cent over the two years 2008-09. However, by 2011 the value of sales had almost reached the record level of 2007, and they have remained between $56bn and $68bn in the years since.
- "Boom amid the bust". The Financial Times.
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