When it comes to get an approach about the real value of art pieces, there is no easy answer. Most of the time it is a matter of both imagination and perception, and usually goes beyond that, as long as they represent a moment of inspiration by an artist which has no Price because it is scarce. They are public goods. So, that is the reason because most of these pieces, are better valued at museums ,where its intrinsic value, get higher while increasing amount of people admired them. However, like any public good (parks),whether there is not any protection policy,it may be on the contrary. The local authorities in charge of The Fontana di Trevi in Rome, had to change the tourist preferences for throwing coins at it, because it did not make any good to preserve its value.So, like most of public good, art pieces depends upon local authorities policies to preserve them.
But what about if someone try to buy a piece of art?.In such case, it is when prices come along, and with it the market power.
There is private market for art pieces,because these are profitable alternative for long run investment .The expected benefit of these investments, may be more stable than financial assets whose market value is affected by both market fluctuations and cycles,either up or down depending on how every financial assets fit with the outcome of such a fluctuations. Some of them , may not survive because its value evaporate as the business activities which are based on , do not longer stay on after after the economic fluctuations are over.
Art pieces instead, are somehow above time, because they are not tied to anything by itself. This means that at time goes by, its value will go higher, because it become more relevant the scarcity of the talented necessary to create it .If such a talents were widely available, prices of art pieces will be easier to set by customer interested to buy them.
It follows that anyone who may be looking for investment alternatives, the arts pieces are a good ones.
That was the historic case for the Da Vinci´s "Salvatori Mundi", which was sold by more tan USD 400 million (USD 450 million), 400% higher than its previous Price.This Price came about after the latest two or three buyers pushed it higher .These are the situations what markets are for.
Let asume that throughout social networks ,arise the question of who would like to have such a valuable piece of art, and what potential customers would be willing to do such as to get the painting.Probably thousands if not millions would be ready to go for it at any cost.But how to solve the problem that there is only one piece of such art piece?.The Market provide the solution by setting a Price.Of course only one customer could afford the Price, but the allocation process went smoothly, and nobody who was left out, would complain foul.
That represent the social value of markets. Its ability to provide solutions which otherwise it would be hard to come by without high costs.As long as markets are the driven force of the allocation process, the outcomes will match societu expectations about its welfare preferences. However, it is well known that markets not always work prefectly.
a.- No all customers may pay all the prices.Some are left out and then it is when eficient public policies comes along.Health and human capital decisions (education), are the usual examples .
b. Markets can fail to solve the allocation problem.That is the case of common and public goods.In this case, it is also necessary to have efficient public policies, and strong institutional frameworks (laws).
Thus, markets provide the first best solutions for the allocation of resources, which can not be matched by the State.However, because of price restrictions,efficient public policies must do the remaining task of making sure that society get the benefit of it.-
