Discoveries of fakes: their impact on the art market

Despite the dramatic surge in the production of fakes, their impact on the art market remains unexplored. This paper investigates the overall impact that the discovery of a fake painting, for example a fake Gauguin, has on the market for paintings from the same artist (Gauguin’s artworks). Before the fake’s discovery, artworks are less likely to be sold through Sotheby’s or Christie’s suggesting that sellers may wish to avoid their extensive scrutiny. However, when fakes have been discovered sellers rely more often on these auction houses, probably because they are viewed as providing a credible form of certification. Surprisingly, fake discoveries have almost no impact on the probability to sell an artwork. Prices only react negatively with a lag, suggesting that sellers try to postpone their sales as long as possible. Eventually, close to a year after fakes have been made public, prices increase indicating that buyers view the market as purged.