nep-cul New Economics Papers
on Cultural Economics
Issue of 2014‒12‒24
twelve papers chosen by
Roberto Zanola
Università degli Studi del Piemonte Orientale “Amedeo Avogadro”

  1. Auction House Guarantees for Works of Art By Graddy, Kathryn; Hamilton, Jonathan
  2. Art as an alternative asset class: Risk and return characteristics of the Middle Eastern & Northern African art markets By Kräussl, Roman
  3. “Phantom of the Opera” or “Sex and the City”? Historical Amenities as Sources of Exogenous Variation By Bauer, Thomas; Breidenbach, Philipp; Schmidt, Christoph M
  4. Reimagining the design in the middle earth: From design driven innovation to design boosted cultural heritage By Monica Calcagno; Erika Cavriani
  5. Is there a bubble in the art market? By Kräussl, Roman; Lehnert, Thorsten; Martelin, Nicolas
  6. Urban Resilience: Store Location Dynamics and Cultural Heritage By Mark van Duijn; Jan Rouwendal; Ruben van Loon
  7. Creative economy policy in developing countries: the case of Indonesia By Fikri Zul Fahmi
  8. Innovation in creative cities: Evidence from British small firms By Lee, Neil; Rodriguez-Pose, Andres
  9. Information, Media and Elections: Incentives for Media Capture By Serena Marianna Drufuca
  10. Environmental protection between social responsibility, green investments and cultural values By Andrei, Jean; Panait, Mirela; Ene, Corina
  11. Towards a co-creative recapitalization of territorial systems By Luciano De Bonis; Eugenio Leanza; Jesse Marsh; Ferdinando Trapani
  12. Auctions with prestige motives By BOS, Olivier; TRUYTS, Tom; ,

  1. By: Graddy, Kathryn; Hamilton, Jonathan
    Abstract: Auction houses use both in-house and third-party guarantees for sellers who are concerned about the risk that not enough bidders will enter the auction for their works. Auction houses are compensated for guarantees by buyers’ commissions and successful sales after attracting important works of art. Sellers compensate third-party guarantors by splitting the excess of the final sale price over the guarantee. The guarantor can bid in the auction, and at Christie's, the third-party guarantor still receives a share of the difference between the winning price and the guarantee price, even if he wins the auction, which means the guarantor has a “toehold”. We explore the effect of guarantees (both in-house and third-party) on prices in art auctions, using a large database of auctions and a smaller database of repeat sales.
    Keywords: economics of art; price guarantees; toeholds in auctions
    JEL: D44 L82 Z11 Z18
    Date: 2014–05
  2. By: Kräussl, Roman
    Abstract: This chapter analyzes the risk and return characteristics of investments in artists from the Middle East and Northern Africa (MENA) region over the sample period 2000 to 2012. With hedonic regression modeling we create an annual index that is based on 3,544 paintings created by 663 MENA artists. Our empirical results prove that investing in such a hypothetical index provides strong financial returns. While the results show an exponential growth in sales since 2006, the geometric annual return of the MENA art index is a stable13.9 percent over the whole period. We conclude that investing in MENA paintings would have been profitable but also note that we examined the performance of an emerging art market that has only seen an upward trend without any correction, yet.
    Keywords: Alternative investments,Art price index,Optimal Asset Allocation
    JEL: G11 Z11
    Date: 2014
  3. By: Bauer, Thomas; Breidenbach, Philipp; Schmidt, Christoph M
    Abstract: Using the location of baroque opera houses as a natural experiment, Falck et al. (2011) claim to document a positive causal effect of the supply of cultural goods on today’s regional distribution of talents. This paper raises serious doubts on the validity of the identification strategy underlying these estimates, though. While we are able to replicate the original results, we proceed to show that the same empirical strategy also assigns positive causal effects to the location of historical brothels and breweries. These estimated effects are similar in size and significance to those of historical opera houses. We document that all these estimates reflect the importance of institutions for long-run economic growth, and that the effect of historical amenities on the contemporary local share of high skilled workers disappears upon controlling for regions’ historical importance.
    Keywords: historical amenities; human capital; regional competitiveness
    JEL: H42 J24 R11
    Date: 2014–08
  4. By: Monica Calcagno (Dept. of Management, Università Ca' Foscari Venice); Erika Cavriani (Dept. of Management, Università Ca' Foscari Venice)
    Abstract: The present paper aims to discuss one possible dimension of crosspollination, the one emerging from the overlap between the domain of arts and that of management. This paper intends to investigate how a re-imagined design process of cultural-sensitive products, those with cultural codes embedded, could develop new avenues for business and social value, boosting as a long term value the Cultural HeritageÕs growth. More specifically, the present paper proposes the analysis and interpretation of an open innovation project launched by the Rijks Museum and joined by Droog. Using the data which emerged from this experience, the work proposes a model of sustainable cultural development, opening a new perspective on the relationship between cultural and creative industries.
    Keywords: design, cultural heritage development, cultural codes, CCIs
    JEL: M40
    Date: 2014–11
  5. By: Kräussl, Roman; Lehnert, Thorsten; Martelin, Nicolas
    Abstract: The record-breaking prices observed in the art market over the last three years raise the question of whether we are experiencing a speculative bubble. Given the difficulty to determine the fundamental value of artworks, we apply a right-tailed unit root test with forward recursive regressions (SADF test) to detect explosive behaviors directly in the time series of four different art market segments ("Impressionist and Modern", "Post-war and Contemporary", "American", and "Latin American") for the period from 1970 to 2013. We identify two historical speculative bubbles and find an explosive movement in today's "Post-war and Contemporary" and "American" fine art market segments.
    Keywords: Art market,Alternative investments,Speculative bubbles,Explosive behavior
    JEL: G12 G14 Z11
    Date: 2014
  6. By: Mark van Duijn; Jan Rouwendal; Ruben van Loon
    Abstract: In this paper we study the relationship between cultural heritage and retail store dynamics at the neighbourhood level in the Netherlands. We analyze the total number of stores, number of vacant stores and number of stores by retail sub-industry in neighbourhoods, thereby focusing on the impact of cultural heritage, while controlling for many other factors. We test whether the presence of cultural heritage has a causal impact on the retail activity in neighbourhoods using an instrumental variables strategy for cross-section data. We also compare the development of the various indicators of retail activity over time in neighbourhoods with and without cultural heritage to investigate a the existence of an impact of historical districts and buildings on urban resilience. We use a unique panel dataset from Locatus which has information on the location and type of stores in the Netherlands over a period of 7 years (2004-2010). The results show that the presence of cultural heritage increases the demand for shopping areas. Therefore, there are more stores in neighbourhoods where cultural heritage is present. We also show that the impact of cultural heritage and distance to the city centre for retail activity slowly changes over time, indicating a continuously changing urban environment. Furthermore, we provide evidence on the resilience of stores within cultural-rich neighbourhoods after the recession started in 2007 using a duration analysis.
    JEL: L81 R12 R33 Z1
    Date: 2014–11
  7. By: Fikri Zul Fahmi
    Abstract: This paper elaborates on how the global discourse on creative economy is interpreted in developing countries. We accomplish this by examining how the discourse has been institutionalized in several Indonesian cities. As an effect of decentralization, localities attempt to become a winner among other regions. The creative economy policy is thus pragmatically adopted to boost economic growth. Often these localities do not consider their local contexts before applying this policy. The creative economy in Indonesia is different in nature as interpreted in a different way. Traditional cultural industries are imposed to be included as creative industries, but they hardly perform new knowledge learning and innovation. This policy is implemented also to preserve traditional culture values, while efforts in improving knowledge and innovative capacity are taken for granted. The strong attachment to traditions could be the barrier to developing recent design and innovative products.
    JEL: D02 O43 O53 R58 Z18
    Date: 2014–11
  8. By: Lee, Neil; Rodriguez-Pose, Andres
    Abstract: Creative cities are seen as important sites for the generation of new ideas, products and processes. Yet, beyond case studies of a few high-profile cities, there is little empirical evidence on the link between local creative industries concentration and innovation. This paper addresses this gap with an analysis of around 1,300 UK SMEs. The results suggest that firms in local economies with high shares of creative industries employment are significantly more likely to introduce entirely new products and processes than firms elsewhere, but not innovations which are simply new to the firm. This effect is not exclusive to creative industries firms and seems to be largely due to firms in medium sized, rather than large, cities. The results imply that creative cities may have functional specialisations in new content creation and so firms are more innovative in them.
    Keywords: cities; creative cities; creative industries; creativity; innovation
    JEL: O31 O38 R11 R58
    Date: 2014–11
  9. By: Serena Marianna Drufuca
    Abstract: Media play an essential role in democracy by making available valuable information for electoral decisions. In a framework of political economy of mass media, I inquiry the possibility of capture by rent-seeking o cers in a heterogeneous electoral environment. This allow me to discuss when relevant information is traded, when government captures media and what e ect this has on political outcomes. I nd media capture to be a pervasive phenomenon which implies minimum costs on politicians' side. However, incentives to corruption decrease if the possibility of being detected is introduced, leading to a more intermediate result with respect to the one obtained by Besley and Prat (2006). I show that information is a fundamental element for electoral choices and that any attempt to increase quality of news and to reduce information's costs can have positive e ects on the selection of politicians.
    Keywords: mass media; information acquisition; media capture; elections; incumbency advantage
    JEL: L82 D72 D73 D81 H10
    Date: 2014
  10. By: Andrei, Jean; Panait, Mirela; Ene, Corina
    Abstract: In a well functional and competitive economy all the entrepreneurs are aware of the importance of protecting the environment, development of local communities and the good relations with stakeholders. The necessity imposed by a sustainable development has many influences on the company’s activities because in order to equilibrate their profit`s motivation with their social and environment implications. This article is focused on the way of different investors integrated in their strategies the environment preoccupations. The actions of companies are shaped by different stakeholders like consumers, public authorities, shareholders, international organizations and other entities.
    Keywords: Environment, cultural values, stakeholders, consumers, corporate social responsibility, green investment
    JEL: A1 M1 Q01
    Date: 2014–11–12
  11. By: Luciano De Bonis; Eugenio Leanza; Jesse Marsh; Ferdinando Trapani
    Abstract: Towards a co-creative recapitalization of territorial systems De Bonis L.1, Leanza E.2, Marsh J.3 Trapani F.4 1 University of Molise, 2 European Investment Bank, 3 Atelier Studio Associato, 4 University of Palermo, Keywords territorial capital , territorial innovation, co- creativity In European and national policies it is by now evident that the approach to spatial issues favours "economic reasons" over "territorial reasons". The recent emphasis on "cities as drivers of development", although an improvement over previous programming periods, remains fully situated within this logic. The reasons for this economic imperative are somewhat comprehensible, as the EU struggles to respond to the deep economic crisis, with its territories more vulnerable than ever to the negative consequences of globalization as a consequence of the single market and monetary union. It is however less easy to understand the fact that any consideration of "urban assets" and their management is equally overshadowed in both the rhetoric and the practice of European ? and even more, national and regional ? spatial programming, especially considering the effective contribution to an understanding of economic and financial dynamics and potentials. The thesis here is that the dichotomy between economic and territorial logics can be overcome if the framework of analysis shifts from "management of territorial impacts" to the "co-design of territorial visions", as the two become intimately intertwined in an approach of "territorial innovation". This in turn shifts the reading of territorial assets from a mere accounting of static value to a recapitalization of local contexts as a function of their innovation potential, allowing for the dynamics of development to reach self-sustainability in both territorial and economic-financial terms while evolving in concert with global flows. Prerequisite for this co-evolutionary, self-sustainable recapitalization of local settings is the consideration of the human, cultural, and social dimensions as integral components of territorial capital, together with the need for co-creative approaches to the planning, implementation, and management of digital and urban agendas, seen as inseparable more than simply interconnected.
    Keywords: 2
    Date: 2014–11
  12. By: BOS, Olivier (Panthéon-Assas University, LEMMA, France); TRUYTS, Tom (CEREC, Saint-Louis University, B-1000 Brussels, Belgium; CES, KU Leuven, B-3000 Leuven, Belgium and Université catholique de Louvain, CORE, B-1348 Louvain-la-Neuve, Belgium); ,
    Abstract: Social status, or prestige, is an important motive for buying art or collectibles and for participation in charity auctions. We study a symmetric private value auction with prestige motives, in which the auction outcome is used by an outside observer to infer the bidders’ types. We elicit conditions under which an essentially unique D1 equilibrium bidding function exists in four auction formats: first-price, second-price, all-pay and the English auction. We obtain a strict ranking in terms of expected revenues: the first-price and all-pay auctions are dominating the English auction but are dominated by the second-price auction. Expected revenue equivalence is restored asymptotically for the number of bidders going to infinity.
    Keywords: costly signaling, D1 criterion, social status, art auctions, charity auctions
    JEL: D44 D82
    Date: 2014–08–19

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