At a Christie’s auction, a painting of a candle by German artist Gerhard Richter sold for $16.5 million.
A recent documentary on this 80-year-old artist shows him painting in his studio and attending gallery and museum exhibitions of his work. Neither the film maker nor Mr. Richter say very much. We observe him as he very humanly and humbly assesses 2 paintings as he creates them. At exhibitions, sometimes his discomfort is evident.
While the movie is rather quiet, the art world has had an electric response to his presence. At exhibitions, photographers and adulation surround him. As the top selling living artist last year, his paintings sold at auction for a total of $200 million.
According to WSJ.com, the supply and demand sides of the market for Gerhard Richter paintings convey a typical success story. On the supply side is a prolific and talented painter whom art galleries and auction houses are “eager…to canonize.” With “a steady volume…but not a glut,” and a retrospective exhibit drawing massive crowds in Europe, the supply side appears to be ideally situated for high prices. Meanwhile, on the demand side, when an artist becomes a sensation, “tastemakers,” dealers, “status seekers” and collectors enter the market with considerable money to spend. Put the supply and demand sides together and you get astronomical prices. At the gallery that represents him in NYC, there is a waiting list for his multi-million dollar paintings.
The Economic Lesson
The Price of Everything, a very good book, explains high salaries. With limited supply, sufficiently affluent demand and a huge (adulatory) audience that technology can facilitate, 21st century markets for superstar painters or golfers or rappers can involve huge salaries. Here, a University of Chicago economist discusses the rationale and math behind superstar salaries.
In some ways, all pricey markets share the same characteristics, even with pigeons.
An Economic Question: Through a demand and supply graph for an artist superstar, how might you illustrate a high salary?