Original Research

Mapping the relationship between the primary and the secondary art market

Peter Baur, Gideon Els
Journal of Economic and Financial Sciences | Vol 8, No 2 | a107 | DOI: https://doi.org/10.4102/jef.v8i2.107 | © 2019 Peter Baur, Gideon Els | This work is licensed under CC Attribution 4.0
Submitted: 21 December 2017 | Published: 30 July 2015

About the author(s)

Peter Baur, Department of Economics and Econometrics, University of Johannesburg, South Africa
Gideon Els, Department of Finance and Investment Management, University of Johannesburg, South Africa

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The article endeavours to construct a model that links the gap between returns to an investment in ‘Fine Art’ and the ‘real’ price of the 'Fine Art' being traded. Thus the process used in creating shared value within the market for 'Fine Art' is examined. Art prices are usually set in the primary market through the auction process, which should also typically reflect an efficient way of creating shared value. As the auction process in the primary art market is not efficient; it does not create shared value as would occur in a typical free market structure. Artificial rigidities exist within the primary art market; thus the links between the primary art market and the secondary art market are shown by incorporating the concepts of the 'Value of Information' and ‘Strategic Uncertainty’ into the transmission mechanism.


value of information; transmission mechanism; investor returns in the market for ‘fine art’; market rigidities


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