Nicole Dornbusch Horowitz
Volume 66, Issue 1, 331-359
In the 1920s and 1930s, major oil companies took advantage of market conditions to raise gasoline prices. They sold a limited amount of gasoline on smaller submarkets and the remainder of their gasoline by other methods. Despite the fact that the submarkets only represented a small portion of the overall gasoline market, pricing in the greater market was based on them. Thus, through collusive agreements, major oil companies were able to raise prices in the overall market by inflating prices in the smaller markets. In United States v. Socony-Vacuum Oil Co., the U.S. Supreme Court held that these agreements constituted price-fixing and violated the Sherman Act.
Today, conditions in the art market create opportunities and incentives for coordinated price manipulation similar to those present in Socony-Vacuum. Art sold at auction represents a small portion of the art market, but prices paid for art at auction are used to determine prices in the larger market. Further, the art market’s opacity and the fact that small, tight-knit groups buy and sell high-end artworks provide even greater opportunities for collusion than those present in Socony-Vacuum. This Note examines these comparable opportunities and incentives through a study of activity in the market for artworks by Andy Warhol.