Monday, August 1, 2011
"Droit de Suite" in the UK: Economic Impact So Far
I’ve written here before about “Droit de Suite” or artist’s resale rights. These are fees paid to artists when their work is resold. And I’ve written about some of the bad arguments often made against the adoption of droit de suite. In 2006 the UK adopted artists’ resale rights for living artists, and in 2012 they plan to extend the legislation to benefit the heirs of artists who have died within the past seventy years. At the time that droit de suite was implemented in the UK, many artworld figures made dire predictions that prices for the work of living artists would fall, and that those with artworks to re-sell would leave the UK for markets (such as China, Switzerland, and the U.S.) where artists’ resale rights did not apply. Either of these consequences would have been bad news for the UK art market, and for the many artists, designers, dealers, and others, whose livelihood is linked to it.
Have any of these dire predictions come true? Chanont Banternghansa, an economist at the National Bureau of Economic Research, and Kathryn Graddy, a professor in the Department of Economics at Brandeis University, decided to investigate the effect of artists’ resale rights in the UK. Their paper, “The impact of the Droit de Suite in the UK: an empirical analysis,” appeared recently in the Journal of Cultural Economics (2011) 35:2. (It is also available here, on Professor Graddy’s website.) Their results should be encouraging for those who argue that the Canadian government should adopt similar legislation to that already in force in the European Union.
Banternghansa and Graddy focused on works sold by the two major auction houses, Christie’s and Sotheby’s, from August 1, 1993 until July 31, 2007. (They excluded works sold by dealers, as prices paid and quantities sold are difficult to verify.) They made two different comparisons. First they compared those works that would be subject to droit de suite after February 1, 2006 with all art works in the UK that would not be subject to droit de suite. Next, they compared those same works (those subject to the droit de suite after February 2006), with works that were sold in other countries, but would have been subject to droit de suite if sold in the UK.
Banternghansa and Graddy found no evidence that the adoption of artists’ resale rights had a negative impact on price. They speculate that art buyers, in determining what they will pay for a given work, may not calculate the effect that the droit de suite will have on future re-sales, or that the effect may be too small to measure. As they say, given the inherent difficulty of pricing art and the high commission fees paid by both buyers and sellers, the droit de suite may not figure very largely in sellers’ thinking. Banternghansa and Graddy also found no evidence that those wishing to re-sell works subject to droit de suite had deserted the UK for other markets. However they caution that this might change when the UK extends artists’ resale rights to an artist’s heirs after his or her death.
The impact of droit de suite on the UK art market seems to have been minimal so far. Certainly, the most pessimistic forecasts have not come to pass. This might give some confidence to those who would like to see Canada also adopt a policy of artists’ resale rights.