Working Paper: CEPR ID: DP4662
Authors: Orley C. Ashenfelter; Kathryn Graddy
Abstract: The Sotheby?s/Christie?s price-fixing scandal that ended in the public trial of Alfred Taubman provides a unique window on a number of key economic and antitrust policy issues related to the use of the auction system. The trial provided detailed evidence as to how the price fixing worked, and the economic conditions under which it was started and began to fall apart. The outcome of the case also provides evidence on the novel auction process used to choose the lead counsel for the civil settlement. Finally, though buyers received the bulk of the damages, a straightforward application of the economic theory of auctions shows that it is unlikely that successful buyers as a group were injured.
Keywords: auctions; cartels; commissions; price-fixing
JEL Codes: D44; K21; L41
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Downturn in the auction market for art (D44) | Initiation of the price-fixing conspiracy (L11) |
| Price-fixing conspiracy (L42) | Increase in sellers' commissions (D49) |
| Improvement in market conditions (L10) | Dissolution of the price-fixing conspiracy (L42) |
| U.S. Justice Department's amnesty policy (K37) | Revelation of the price-fixing conspiracy (L42) |
| Threat of prosecution (K42) | Incentivization of co-conspirators to provide evidence (K42) |
| Civil settlement (K41) | Distribution of damages to buyers (D39) |