In this paper, we investigate how product prices evolve as the market diffuses from the time of its inception through its growth, maturity phase and decline phases. Using data collected for fifteen years from 46 traditional, live (Christies and Sotheby’s) and online art auctions, we investigate the dynamics of prices and its determinants at different market evolution stages. The focus is on Modern Indian Art which came into being in the auction market only since 1995. Since then, the market grew from selling $2 million of art items annually to over $140 million in 2006. During this period over 14,000 art items were auctioned for a total value of $442.4 million, with over 3000 bidders participating in the online auctions. In this research, we investigate how the effect of some of the price determinants on product prices change over the market cycle, such as product characteristics, artist (producer) characteristics, and auction (marketplace) characteristics. We also investigate the pattern of evolution of price for individual artists. Finally, we discuss the managerial implications of our findings and provide guidance for how buyers, sellers, and auction houses can participate more efficiently over market life-cycles.
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- An Examination Of Price Evolution of Products During Market Diffusion Stages: a Case With Fine Arts
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