Federico Etro and Elena Stepanova The Market for Paintings in the Netherlands during the Seventeenth Century ISSN: 1827-3580 No. 16/WP/2013 Working Papers Department of Economics Ca’ Foscari University of Venice N o . 16/ WP/ 2013 ISSN 1827-3580 The Market for Paintings in the Netherlands during the Seventeenth Century Federico Etro University of Venice, Ca’ Foscari and Elena Stepanova S. Anna School of Advanced Studies, Pisa This Draft: July 2013 Abstract We analyze the price of paintings in Dutch inventories and auctions of the Golden Age. The econometric investigation emphasizes correlations between prices adjusted for inflation and characteristics of the paintings, of the painters, of the owners (job, religion, size of the house) and, in case of auctions, also of the buyers. Price differentials for alternative genres, for the characteristics of the traders and the purpose of the inventory tend to disappear after con-trolling for the unobservable quality of paintings with artists fixed effects. The real price of a representative painting declined over the XVII century. We argue that initial high prices were the fruit of the large increase in demand by the Dutch middle class, which attracted en - dogenous entry of painters. This led to intense competition and the development of cost-saving innovations for mass production (high specialization in genres, smaller paintings, mo -nochromatic styles) so as to gradually reduce prices. We also run a multinomial probit model to verify the Montias hypothe sis on the location of painting s between rooms of Dutch houses. Keywords Art market, Endogenous entry, Dutch Golden Age Hedonic pricing analysis JEL Codes Z11, N0, D4 Address for correspondence: Federico Etro Department of Economics Ca’ Foscari University of Venice Cannaregio 873, Fondamenta S.Giobbe 30121 Venezia - Italy Phone: (++39) 041 2349172 Fax: (++39) 041 2349176 e-mail:
[email protected] This Working Paper is published under the auspices of the Department of Economics of the Ca’ Foscari University of Venice.