The Role of Art & Antique Dealers An Added Value
to secure the best possible sale for them, but they are also bound not to put their personal interests before this duty, and not to profit from their position as an agent or intermediary, unless the principal expressly consents to it.
In practice, there have been transactions carried out by dealers and other parties acting together to make a sale where it has been unclear to a buyer who is acting on whose behalf. However, a number of high profile legal cases have underlined the importance of transparency with regard to interested parties, commissions and ultimate prices, as well as the need for dealers to ensure that their arrangements are properly documented and authorised.
Figure 3. Common Dealer Business Models Trader
Principal
Case-by-Case Mix
Agent
Holder © Arts Economics 2011 Dealers can focus on mass markets or niche markets
Finally, another important difference between dealers and the strategies they pursue is whether they focus on broad “mass- markets” or cater to niche segments of buyers. The business model used for the former is one of buying low and using heavy marketing to enable them to sell at higher prices to a broad, mainstream, mass-affluent public. These buyers are often either relatively new or infrequent purchasers in the market, and rely on the prestige or renown of a gallery or artist, with relatively low personal expertise. The alternative model is one in which dealers focus on offering distinct connoisseurship and expertise in a particular sector, and are heavily involved in researching and studying the works they sell, often adding to their value through historical referencing or tracing provenance. These dealers sell to niche segments of buyers that are only interested in certain types of works (such as those of high quality or with a particular historical profile), and will pay high prices for those that fit their criteria. These buyers are often more knowledgeable and have relatively price inelastic demand10
, and willing
to pay whatever price necessary for works appropriate to their collections, as these are necessarily in more limited supply.
Historical & Future Perspectives 29
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