Aligning Tactics with Market Capabilities in the Art World : Strategically Capitalizing on Repeat Print Sale Economies

We apply both auction-dynamics and assortment planning/revenue management lenses to study the effectiveness of repeatedly offering prints of a series for sale at various international auction houses. Theory suggests the potential for differences in the ability of auction houses to buffer sale prices against the repeat appearance of prints, hence positioning certain houses to leverage such repetition. To investigate this potential empirically we employ a fairly novel two-step analysis procedure. We start with the use of a hedonic variant of hierarchical linear modeling (HLM) to estimate the ostensibly unique capabilities of auction houses to obtain relatively high sales prices for repeated-offering print sales of specific genres of art. To account for tradeoffs associated with leveraging multiple repeated-sale capabilities for various genres, we then apply data envelopment analysis to the residuals for the internally repeated sales derived from the hedonic HLM estimation procedures. We find auction houses to generally align their offerings of recently sold print series with their own repeat sale capabilities (RSCs). We also find houses that often repeat the sale of prints internally, and possess strong repeat sale capabilities, further enjoy the prospects of operational efficiency