Sorting buyers into positive and negative categories to protect the market

What is it about?

Art gallerists provide a wonderful example to examine the important work of market intermediaries to protect long-term asset value in investments and beyond. This research found that gallerists acting as gatekeepers in the art market use discrete buyer categories and ongoing monitoring to protect long‑term asset value. One gap was that this research focused on specific work practices. Hence, future gatekeeping research could further examine the best roles for technology (e.g., CRM, market‑data feeds, risk scoring and workflow/audit capabilities), as opposed to practice-based governance and ethical safeguards. Moreover, consumer reactions to gatekeeping practices focused on protecting value would be an interesting area for future research.

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Photo by Dannie Jing on Unsplash

Photo by Dannie Jing on Unsplash

Why is it important?

For those interested in the high-value art market, these gatekeeping practices highlight some of the typical expectations for the art market in terms of the obligations of buyers and sellers and focus on long-term value. Resistance to speculative buyers seeking short-term monetary value was widespread, particularly for those activities that could damage artistic careers and value in the long term. For a finance audience, the implication is that firms who manage unique or illiquid assets would benefit from the use of similar practices to those seen in the art market, including client segmentation, contractual resale controls (e.g., rights of first refusal), continuous monitoring, and cooperation across intermediaries. These and related gatekeeping practices can reduce speculative volatility and protect reputations.