View metadata, citation and similar papers at core.ac.uk brought to you by CORE provided by Research Papers in Economics SELLING PICASSO PAINTINGS: 1 THE EFFICIENCY OF AUCTION HOUSES Finn R. Førsund Department of Economics, University of Oslo, Norway and Visiting Fellow ICER, Turin, Italy Email:
[email protected] and Roberto Zanola Department of Public Policy and Public Choice, University of Eastern Piedmont, Italy. Email:
[email protected] May 17, 2001 Abstract. Previous works applying hedonic price technique to determine the formation of auction prices of objects of art have found no conclusive result about the impact of auction houses on final prices. In these studies the object of art has been the unit, and influence of auction houses is analysed by testing whether auction house impact on price is significant or not within a framework of central tendencies. In order to focus on auction houses as a unit we have applied a benchmarking technique, DEA, developed for efficiency studies. Categorial and continuous variables are used as inputs and auction prices as outputs. Performance indicators are defined and calculated giving an insight into auction house differences impossible to obtain using hedonic price approach. Key words: painting, auction house, hedonic price, DEA, efficiency. JEL classification: C6, D2, Z1. 1 A first version of the paper was written while the first author was a visiting fellow at International Centre for Economic Research (ICER), Turin, January – March 2001. It is part of the project “Cheaper and better?” at the Frisch Centre, financed by the Norwegian Research Council, and of the project on “Cultural goods” financed by the Italian Research Council.