In this research, we investigate the dynamics of one market cycle of Indian art through its various phases of development from early growth to peak and then through a decline. Using the entire online market data for Modern Indian art, we examine how the internal dynamics of the price formation process during auctions changed during the course of this market’s evolution. Our results show that the structure of the price formation process varies systematically over the course of the cycle and the impact of the brand (artist), the product (painting), market information (pre-auction estimates), demand (competition), and consumer (bidder) characteristics changed across the stages of market evolution. Specifically, the revenue, price per square inch, and the number of lots sold (items) from established artists closely followed the overall trend in the market. On the other hand, the number of lots and revenue from emerging artists had a minimal increase during the growth phase of the market. However, these artists maintained their value even when the market was declining. Furthermore, 80% of the lots by established artists beat the preauction estimates during the growth period, compared to only 40% for emerging artists. In contrast, during the decline stage, more lots from emerging artists (8%) beat the preauction estimates than lots from established artists (2%). We also find that bidders entered the auction much earlier during the growth phase of the market than during the maturity and decline stages. These findings have implications for multiple stakeholders in the online art auction market including, sellers, buyers, artists, and auction houses.

• Mayukh Dass(Texas Tech University, USA)
• Piyush Kumar(University of Georgia, USA)
• Srinivas K. Reddy(Singapore Management University, Singapore)