Bargaining Power and Artists' Resale Dividends

This paper explores the implications of models of bargaining power for issues having to do with the droit de suite, a legal right of graphic artists to a share in capital gains when a work of art is resold by the first purchaser. It is found that, if both artists and art buyers are risk averse, a po...

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Bibliographic Details
Published in:Journal of cultural economics 1994-01, Vol.18 (2), p.101-112
Main Author: McCAIN, ROGER A.
Format: Article
Language:English
Subjects:
Art objects
Bargaining power
Bargaining theory
Denial
Dividends
Economic theory
Marginal utility
Resale
Risk aversion
Transaction costs
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Summary:This paper explores the implications of models of bargaining power for issues having to do with the droit de suite, a legal right of graphic artists to a share in capital gains when a work of art is resold by the first purchaser. It is found that, if both artists and art buyers are risk averse, a positive resale share will be the outcome of a bargaining process that is Pareto-optimal as between the bargainers. This does not depend on bargaining power but is a form of risk-sharing, and to the extent that art buyers are risk averse will be preferred to a zero share by the buyers. Since resale royalties are not ordinarily a feature of art sale contracts in the absence of legislation, this appears anomalous, and the paper explores alternatives to the received bargaining theory such as might correspond better with casual empiricism.
ISSN:0885-2545
1573-6997
DOI:10.1007/BF01078933