The Price of Protection

In August 2016, Germany has introduced the Cultural Property Protection Act that restraints the export of old artworks that are considered important for Germany’s cultural patrimony. Long before the Act came into effect, opponents heavily criticized the law and prognosed serious negative impacts on the German art market. Now, three years after the law was introduced, this master thesis provides the first empirical analysis of its effects on art prices. Within the framework of difference-in-differences analysis, a hedonic pricing regression is applied to estimate the treatment effect of the law on art prices. The dataset consists of worldwide auction sales of artworks from 181 German artists. In total around 200,000 observations of auction sales between 1984 and 2019 were collected in a laborious process and analysed. This master thesis provides significant and robust evidence that the introduction of the law impacted the prices of artworks sold in Germany. The prices of artworks that fall under the regulation decreased by 17 percent due to the law. In the year leading up to the introduction of the law, which was marked by heavy public debates, an even larger negative effect of 24 percent was found. For sales outside Germany there was no significant effect observable.