The Economist—which ought be reliable when it comes to understanding the ways in which markets function—published two weeks ago yet another conspiracy-loving take on the Fall New York auctions. We commented on the essay here pointing out that the auction houses are the seller’s agent, not the buyer’s and their guarantees, secret reserves and bidding on behalf of the seller were actions in service of their clients.
An interested party sympathetic to the auction houses responded with these further thoughts:
The buyers—almost all trade (or the collectors they represent)—all know each other and don’t like being forced to compete instead of letting a work get bought in and figuring it out later.
The sellers—so often tax-paying estates or non-profits—are the ones who need the third party option or they are forced to sell privately or in a thinly traded auction market where they could be forced to sell for nothing. All of this invocation of “Free Market” by the trade associations for dealers is just about removing systems (reserves, house bidding on behalf of the consignor, third parties) that are consumer protection against the “intimate” trade.
Furthermore, if the trade does welcome increased transparency in the market, it should adopt disclosure policies in line with the auction houses with respect to restitution, transactions with related parties and interrelated financial interests. These same rules that already apply to auctions should apply to private dealerships and, critically, to the Art Fairs where one can see the private sale market in full, unregulated and consumer-unprotected glory.
Perhaps the ADAA will vote for enactment before Miami Basel this week?