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Bargaining Power and Artists' Resale Dividends
Journal article   Peer reviewed

Bargaining Power and Artists' Resale Dividends

Roger McCain
Journal of cultural economics, v 18(2), pp 101-112
01 Jan 1994

Abstract

Cultural Economics, Economic Sociology, Economic Anthropology: General (Z10) Transactional Relationships, Contracts and Reputation, Networks (L14)
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.

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