International trade in art constantly tries to challenge the conventions of what can be traded. While standard trade is usually between a producer and consumer, such as oil being traded from Iraq to South Africa, trade in art is mainly between consumer and consumer, for example between an art gallery and art collector.
International trade in art constantly tries to challenge the conventions of what can be traded. While standard trade is usually between a producer and consumer, such as oil being traded from Iraq to South Africa, trade in art is mainly between consumer and consumer, for example between an art gallery and art collector.
What drives trade in art is the fact that the product is unique. There are no close substitutes and therefore demand is very high. There will only ever be one Rolling Stones band and only one painting of Mona Lisa. There might be many imitations, but nothing can ever rival the real thing.
Logically, there is no domestic substitute, so there is a need for international trade in art. Its unique nature means art trade is price-inelastic, meaning that the demand for art is affected less by an increase in price.
Art trade can be broken up into three main categories, each with varying durability, manner of production and degree of uniqueness.
The first category is live performing art, an example of which is a Rolling Stones concert.
Next is the category which includes unique, non-reproducible art, like a painting by Jackson Pollock.
The last category is reproducible art, for example novels and movies that are reproduced in various countries.
International trade in art is also versatile: a raw material does not have to be traded. An art exhibition of South African artists in New York can be seen as the trade of cultural capital between the two countries.
For these reasons, international trade in art is highly sustainable, can be very beneficial to participants and is expected to flourish in the coming years where diversifying one's investment risks is important.
This piece was written as a requirement for a course in the Economics and Economic History Department at Rhodes University
