The mechanisms of art market economics are either little known, or considered peculiar. At first glance, the dual nature of art may seem quite complex. Art yields nonfinancial aesthetic rewards, sometimes called psychic returns, and it is a capital asset that gives financial returns when its value appreciates over time. A principal reason why art is a financial asset is that the art market is an evolving industry, which grows through generating new customers and is continuously expanding to new countries, raising the demand for aesthetically superior art works. The theory of the zero sum game explains the values — at times quite extraordinary — achieved in the art market. Contrary to other markets, increased demand doesn’t translate into increased supply. There is only one artwork that a collector can acquire at the expense of another. This is the value of desire that makes art an attractive asset for investment purposes. According to academic studies, the long-term performance of a...

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