Regulation or Reputation? Evidence from the Art Market

Abstract

This article investigates the role of regulation and reputation in the art trade. We look at attribution issues in the auction market, and in France in particular, where both regulatory and reputational mechanisms have been implemented. More specifically, we focus on the Marcus Decree—a pioneering decree that regulates the authentication process of artworks in France since 1981—and the self-regulated authentication systems developed by international top-tier auction houses. Our findings suggest that the implementation of the decree did neither significantly strengthen the market for autograph and non-autograph works, nor radically modify the landscape of attributions in France, whereas similar but stronger trends in prices and volumes are found in reputational markets (UK, US). We also attribute the moderate effects of the Marcus decree to the size and relative depth of the French art market, the concomitant globalization of the art trade and the development of technical art history, compliance mechanisms and legal compliance costs. Our results are supported by empirical evidence from a data set composed of 15th- and 16th-century Flemish paintings auctioned between 1972 and 2015 in a regulated market (FR), but also in reputational markets (UK, US, and other European countries).