DP4662 Anatomy of the Rise and Fall of a Price-Fixing Conspiracy: Auctions at Sotheby's and Christie's

Author(s): Orley C Ashenfelter , Kathryn Graddy

Publication Date: October 2004

Keyword(s): auctions , price-fixing , cartels , commissions

JEL(s): D44 , K21 , L41

Programme Areas: Industrial Organization

Link to this Page: www.cepr.org/pubs/dps/DP4662.asp

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.