Does a Droit de Suite Benefit Artists? The Case of California
Carson W Bays
Department of Economics
Harriot College of Arts and Sciences
East Carolina University
Greenville, NC 27858-4353
252-328-2948
[email protected]
For presentation at the Association for Cultural Economics International Meetings,
Vienna, July 6-9, 2006
Does a Droit de Suite Benefit Artists? The Case of California
1.
Introduction
The droit de suite, a “right of continuation,” is a law intended to provide creators of
certain types of fine art with a continuing property right in their creations in a manner analogous
to that provided by copyright or trademark. An author receives a royalty each time a copy of the
book is sold. Likewise, an artist can license copies of an original work of art and can demand a
share of the price or a fixed payment for each copy sold. But once an original work of art is sold
the artist’s property right in it disappears. The law is intended to correct this imbalance by
providing that an ad valorem fee be paid to the artist each time the art is resold at a profit. The
first such law was created in France in 1920 and similar provisions subsequently became a part of
the copyright laws of Italy, Germany, Belgium, and about two dozen other countries. The law
has been in effect in Britain since February 14, 2006.
Although the United States currently has no such law at the federal level the state of
California introduced the Resale Royalty Act in 1976.1 It requires sellers of art to pay 5 percent
of the sales price to the artist at resale provided the price is at least $1000 and the price exceeds
the initial sales price. Variants of the droit de suite have been considered at various times by the
federal government and a few other states but California remains the only jurisdiction with such a
law, and this contrast with the other states is exploited in the tests described in this paper. The
statute specifies that the royalty applies when art is sold within the state or if the seller resides in
California. A sale occurring outside the state but made by a California resident therefore is
formally subject to the royalty, but is very unlikely to be enforced given the absence of any
reciprocal arrangements with other states. Moreover, because the state of California receives no
revenue from the royalty it has little incentive to devote enforcement resources to it. Indeed, the
law provided that the state agency to serve as a conduit for directing royalty proceeds to artists is
The California Arts Council rather than the state tax office.
2.
Previous Studies
The potential effects of the droit de suite on artists, galleries, and collectors have been
debated by art professionals, legal scholars, and economists but little empirical evidence is
available regarding the actual impacts of such laws. Supporters of the concept in the legal
literature regard the resale royalty as necessary to extend the protection now provided to
2
composers and writers by the copyright laws to creators of fine art (Johnson, 1992; Liemer,
1998; Reddy, 1995). Critics of the law among legal commentators and art professionals fall into
two groups: those who oppose it because it does not go far enough (Price, 1968; Shapreau,
1998); and those who regard it as extraordinarily cumbersome and difficult to enforce (Ashley,
1977; Carleton, 1991; McInerney, 1984; Siegel, 1998; Weil, 1995).
Opinions by economists on the impact of the droit de suite have had less variability. The
modal prediction made by economists who have studied the issue is that such a law would lower
the prices which artists receive on the initial sales of their creations (Bloch et al, 1978, 1988;
Ginsburg, 2005; Karp and Perloff, 1993; Stanford, 2003). The contention is that the requirement
of a fee being paid on any future profitable resale of art will lower the price that buyers will be
willing to pay at the initial purchase. The price impact of a droit de suite therefore is analogous
to that of an excise tax. This “tax effect” will also have a negative impact on sales made by
galleries and may cause them to decrease their promotional efforts on behalf of art subject to the
royalty2.
A sharply contrasting argument has been made by Solow (1998). Drawing on the
literature on durability goods monopoly stimulated by Coase’s seminal 1972 paper on durable
goods monopolies (Bulow, 1982; Kahn, 1986; Stokey, 1981) he develops a model in which early
and late works by the same artist are regarded as complements by potential buyers. The implicit
assumption in most discussions of art prices is that early and late works are substitutes so that the
artist faces the problem of competing with one’s self over time. This is implicit in the
widespread belief that the market value of artists’ works increase at death.3 However, if an
artist’s reputation grows over time the market value of works produced earlier in a career will
increase. This is the element of complementarity in the Solow model. The presumption is that
once an artist is “discovered” the increase in value of works done during the earlier period of
relative obscurity is an externality captured by their current owners. The introduction of a droit
de suite internalizes a portion of this value to the artists and gives them an incentive to increase
and maintain the quality of the body of work over a lifetime. The law thus allows the artist to
share in the appreciation in value and creates an incentive to hasten the time of “discovery,”
presumably by increasing the current quality of work compared to that without a droit de suite.
In the context of the Coase durable goods monopoly example, the droit de suite provides a
3
mechanism by which artists can provide potentials buyers a credible precommitment not to dilute
the value of buyers’ investments by future overproduction. This increase in quality produces an
increase in current price that could overwhelm the tax effect of the droit de suite so that current
market prices on balance would be increased.4
The relative magnitude of the “quality effect” and the “tax effect” of the droit de suite is
an empirical question that has not yet been answered. Moreover, even if the combined impacts
of the law were to lower current price the artist may still be better off to the extent that the lower
prices on newly-produced works of art are offset by the discounted present value of the future
royalties on them.
3.
Collectors versus Investors
The value of a work of art to its initial purchaser can be expressed as a composite of the
stream of consumption services and the expected capital gain from resale;
(1)
V = Vc(Pt) + [(1+ α)k Pt /(1 + δ)k - Pt]
Where Vc is the stream of consumption services analogous to the rental value and is assumed to
be a function the pre-royalty price of acquisition, P, at time t; α is the expected annual rate of
appreciation of the art; δ is the buyer’s discount rate; and k is the number of years in the future
the art is resold. The annual rates of appreciation and discount can be collapsed into a net
discount rate defined as μ = [(1 + δ)/(1 + α)] - 1. Equation (1) then becomes
(2)
V = Vc(Pt) + [Pt /(1 + μ)k- Pt],
and introducing a droit de suite of ρ percent reduces the value to
(3)
V' = Vc(Pt) + [(1 - ρ)Pt /(1 + μ)k- Pt].
The tax effect of the droit de suite therefore is relevant only to the extent that buyers
regard art as an investment. A “pure” investor is one who regards a work of art as analogous to a
non-interest bearing financial asset the only value of which is the speculative prospect of
eventual appreciation in market value. The term Vc(Pt) in (3) therefore is zero for such a buyer
and the imposition of the droit de suite would lower expected returns and the investor’s current
valuation and reservation price by (1 - ρ). The latter expression thus constitutes the upper bound
of the “tax effect” of the law upon the market price of art. A “pure” collector, in contrast, is a
purchaser for whom the only motivation for buying would be the expected future stream of
consumption value from the art. Having no intention of ever reselling the art such a purchaser
4
would never be subject to the droit de suite . Because only the term Vc(Pt) matters to such a
buyer the valuation and reservation price of the buyer would be unaffected by the tax effect of the
fee. The “quality effect,” on the other hand, will raise the current valuations and reservation
prices of both investors and collectors.5
4.
The Data
Answering the question posed by this paper involves two related issues: the net effect of
the droit de suite on the initial sale price of an art object subject to the law; and the present value
of future royalties to be received by the artist each time the art is resold. The creation of the
California Resale Royalty provides a context for assessing the combined effects of the droit de
suite. Because the royalty was created by state statute it is applicable primarily to sales within
the state of California. The price effects therefore should be revealed by comparing sales within
California to those of the same or comparable art works in other jurisdictions.
A sample of art sales was extracted from AskArt.com, a California firm that collects data
on the sales of art produced by 42,000 American artists, including 125 prominent California
artists. The sample was restricted to works created by California artists because they are the ones
most likely to be affected by the resale royalty. Of those artists, thirty-nine had produced art that
was offered for sale during a time frame to which the Resale Royalty Act applies.7 There were
3,564 different works by those artists offered for sale 3,935 times and generating 2,915 sales over
the sample period May 1987 through July 2005. Data collected on each sale included the identity
of the artist, sales price, art medium, physical dimensions, date of creation, and date and location
of each sale.
A list of artists in the sample and a statistical summary of prices are provided in an
available appendix8. The full sample included 310 sales of sculpture which were are excluded
from the tests described below for lack of a metric suitable for including them with twodimensional works of art. Only original works of art are included: there are no prints, lithographs,
or other types of multiple originals. The sample was further restricted to current sales prices of at
least $1,000 since this is the price point at which the resale royalty becomes effective. All other
dollar values are expressed in real terms.
5.
5
Specification of the Estimating Equation
Isolating the price impact of the resale royalty requires measurement of several other
factors that might affect price. The general form of the equation is
(4)
Pit = f (Hit, Rit, Mit, Lit) + eit, where
Heterogeneity (Hit) of the ith work sold at time, t, is accounted for by size (AREA,
AREA2), medium (OIL, ACRYLIC)9, and age (AGE), defined as years since creation. To capture
any “death effect” on price the variable YRSDEAD is defined as the number of years between the
death of the artist and the sale.
Reputation of the Artist (Rit) is measured in four ways: BOOKREFS is the number of
references to the artist’s work in art books up to the time of sale; MAGREFS is the analogous
number of citations to the artist’s work in art periodicals; and MUSEUMS is the total number of
museums which include at least one example of the artist’s work in their collections. Dummy
variables to identify each artist were also included to capture other reputation effects that are not
measured by these three variables.
Macroeconomic Conditions (Mit) may have effects upon art prices, for both investors and
collectors. These are measured by real gross domestic product in the year of sale (GDP) and
percentage change from the prior quarter (ΔGDP) and the level of the Standard & Poors Index of
500 stocks for the year of sale (S&P) and percentage change from prior quarter (ΔS&P)10.
The year of sale (SALEYR) is entered to detect any time trend in real prices.
Location (Lit ) of each sale is indicated by a binary dummy, CA, which takes the value one
if the sale took place in California and zero if it occurred elsewhere.
6.
Results for Basic Model
The parameters of equation (4) were estimated initially with ordinary least squares and
these results for three variations of the specification are displayed in Table 1. Specifications A
and B include all sales of two-dimensional art between May 1987 and July 2005 while
specification C omits any multiple resales of the same work of art and thus includes only the first
recorded resale over that same period.
The coefficient estimate on the age variable in specifications A and B is insignificantly
different from zero and including it decreases the sample by over 40 percent because the dates of
creation were not available for that portion of the art works in the sample. This variable therefore
6
is dropped from the balance of the estimates. The other measures of product heterogeneity are
generally estimated with acceptable degrees of precision. Both the linear and squared measures of
area confirm that size does matter for price although the effect is relatively modest and the
marginal effect of size is decreasing.11 Media matters as well, with works done in oil or acrylic
selling at a premium compared to other media. The variable measuring years between the death
of the deceased artists in the sample and the date of sale suggests that there is a “death effect” on
price, but it is a negative one. Works by living artists command significantly higher prices.
Coefficient estimates of the reputation variables produce mixed results. For example, the
point estimate on the variable measuring the number of museums that hold an artist’s work
appears in specification A as highly significant but negative, implying the counterintuitive result
that having one’s work displayed in more museums decreases the price at which the artist’s work
sells. This coefficient estimate faded to insignificance, however, when dummy variables
identifying each of the thirty-nine artists in the sample were included in the specification.12 The
museum variable is therefore dropped from the balance of the estimates and replaced with the
artist dummies.13 The two other measures of artist reputation have plausible results but the
significance levels vary depending on the inclusion of other variables in the specification.
References to an artist in either art books or periodicals are associated with modest increases in
the prices of the artist’s work.14
Macroeconomic conditions over the sample period have important effects upon California
art prices. Real price rises with the level of GDP but has a negative association with recent
changes in the level of GDP. On the other hand, the level of the Standard and Poor Index of stock
prices has a negative association with real price suggesting that art may be an alternative to stock
market investment. However, recent changes in the level of the stock index have a direct
association with art prices.15 Several studies have found evidence of cointegration between art
markets and the markets for more traditional financial assets.16 The results found here likely
reflect more complex relationships than can be detected with the relatively simple specifications
tested.
The year of sale coefficient estimate is negative and highly significant in all specifications
and implies that average price increases of California art has been less than the rate of inflation
over the sample period.
7
The main variable of interest, the California state dummy identifying the sales subject to
the Resale Royalty, is highly significant and indicates that art produced by California artists and
resold within the state is subject to a substantial price penalty compared to comparable works sold
in states where the royalty does not apply. Indeed, the implied price impact is substantially higher
than the royalty rate. For equations B and C, for example, the effect of the resale royalty is to
lower price by about 27%.17 There is considerable variance in the distribution of the real price
dependent variable. To determine if point estimates from the least squares technique are being
unduly influenced by a few extreme values the same specification was estimated instead on the
conditional median using quantile regression.18 These results are compared with the least-squares
specification C and are displayed in TABLE 2. This change affects some of the coefficient
estimates, such as those for size, but the CA dummy variable indicating the Resale Royalty is still
negative and highly significant, even though the implied impact of the royalty on price is reduced
to about 24%.
The negative effect of the royalty upon resales in California increases with price. FIGURE
1 displays the point estimates of CA and the relevant 95% confidence intervals plotted for each
successive 5% quantile of prices through the sample. It indicates that the negative effect of the
Resale Royalty on price is robust over most of the price distribution and the absolute value of the
coefficient estimate appears to increase with price beginning at about the 30th percentile. A series
of pair-wise regressions on various interquantile ranges confirm the implication that the price
impact becomes progressively greater at higher prices. Of the 171 possible comparisons between
5% quantile increments, the CA coefficient estimate was significantly different in 53 cases
(TABLE 3).
The implied price effect likely is influenced by California owners offering their art at
auction in other jurisdictions to avoid the royalty. The data are currently being expanded to
perform parallel tests on two additional samples to isolate the separate impact of this selection
bias. The first sample is of prices for California art produced prior to effective date of the statute
and the second is a sample drawn from non-California artists whose works have sold in California
as well as other jurisdictions. The present data have some features consistent with selection bias.
For example, of the twenty-three states registering at least one sale of a California artist during the
sample period, nine had higher mean prices than that of the art sold within California. This was
8
true in spite of the fact that California has a reputation of having a larger and more active market
for fine art than all of these other states except for New York.
7.
Are Lower Prices Offset by Repeated Sales?
The law establishing the Resale Royalty provided that the resellers of art pay the original
artist 5% of the sale price each time the art is resold. Therefore it is possible that the initial price
penalty caused by the royalty eventually could be offset by sufficient resales over time. The
sample data provide little support for this possibility, however. Over the sample period from
May 1987 through July 2005 there were only fifteen works by California artists resold in
California. Only four of those were sold at a nominal profit and no single artist had more than one
profitable resale. These four cases are summarized in TABLE 4. The resale royalties due these
artists each exceeded 5 percent of the nominal initial sale price but the royalties were still much
lower than the price penalties implied by the results above. Moreover, two of the artists
represented in TABLE 4 had several other pieces of art offered at sale that either failed to sell or
sold at a lower nominal price than previously.
8.
Conclusion
The answer to the question posed by this paper is an emphatic No, at least with respect to
the impact upon California artists of the Resale Royalty Act. There is strong evidence that the
home resale market for the work of California artists has been adversely affected due to the tax
effect of the royalty and there is no evidence of an offsetting quality effect. The empirical
challenge of quantifying the precise impact upon price is compounded by the likelihood that
sellers shift their sales out of the California market to avoid the royalty, and this selection effect
increases with price. But although the selection effect obscures the precise effect upon the prices
of art resold in California, the shifting of art sales to venues outside of state produces no royalty
income at all to the affected artists. The movement of sales out of California is so strong and the
number of resales within the state is so small that it is very unlikely that the cumulative effect of
the royalty over time offsets even a modest initial price penalty.
The effects noted in the California art market have implications for the possible extension
of the droit de suite beyond the countries in which it is now exists. They also suggest that the EU
harmonization that extended the law to include Great Britain earlier this year will result eventually
in significant loss of sales in that market to the United States and Switzerland. It gives credence
9
to the rationale of those countries’ continued refusal to adopt a domestic droit de suite.
Switzerland’s reluctance to adopt a droit de suite has increased as more European countries have
adopted it.19 One recurrent argument in favor of harmonization of the law throughout the EU has
been to eliminate the market advantage enjoyed by non-participating countries. Advocates of the
droit de suite contend that universal application to all countries with significant art resale markets
would eliminate the disparate advantages among countries and imply that economic distortions
would disappear.20 Universal application surely would eliminate the differential advantages
among art sellers in different countries, but the economic distortions would become more subtle
rather than disappear. There is substantial evidence of short and long-run relationships between
the art market and the equity market. Imposition of a universal droit de suite would eventually
result in less than the socially optimal investment in the production of art compared to other
investment vehicles. The long-run impacts likely would be similar to those described by
Harberger (1962) for the inefficiencies engendered by U. S. corporate income tax, the accurate
measurement of which that still perplexes economists after more than forty years (Auerbach,
2005).
The results raise a final question to which this paper can provide no answer: Given that
the California Resale Royalty Act likely lowers the welfare of the group that it was presumably
intended to benefit; appears to benefit no one else (with the exception of out-of-state galleries);
and produces no revenue for the state; why does the statute still exist?
10
TABLE 1 - The Determinants of Real Sales Price For Works By 42 California Artists,
1987-2005 (t values in parenthesis)
Variable
AGE
A
Full
Sample
B
Full
Sample
C
No Multiple
Resales
.0007124
(0.67)
AREA
.0002494
.0003006
.0003106
(16.59)
(24.52)
(23.47)
AREASQ
-3.80E-09 -4.99E-09 -5.10E-09
(-8.4)
(-12.97)
(-12.92)
OIL
.8719034
.9682681
.9804511
(13.1)
(19.81)
(18.81)
ACRYLIC
.244631
.1538017
.1568043
(3.13)
(2.45)
(2.31)
YRSDEAD
-.068868
-.0260928 -.030731
(-9.4)
(-2.8)
(-3.16)
BOOKREFS .0180247 0.0030432
.004208
(16.96)
(1.41)
(1.86)
MAGREFS
.0022025
.0074124
.0038645
(0.71)
(2.14)
(1.05)
MUSEUMS* -.016906
(-5.8)
GDP
.0014659
.0017658
.001706
(4.49)
(13.15)
(12.04)
ΔGDP
-16.7332
-20.10619 -18.70716
(-2.54)
(-5.34)
(-4.72)
SP
-9.71E-05 -0.0002312 -.0002138
(-1.36)
(-5.4)
(-4.75)
ΔSP
1.055646
.9236788
.9183823
(2.07)
(3.13)
(2.97)
SOLD
-.001052
-.0011385 -.001094
(-4.65)
(-13.46)
(-12.26)
CA
-.599114
-.31549
-.3211215
(-8.18)
(-5.79)
(-5.67)
CONSTANT 10.59006
9.483642
9.367586
(18.17)
(24.09)
(22.77)
N
1,447
2 ,558
2,295
Adj R2
.58
.69
.69
*Replaced by artist dummies in specifications B and C
11
TABLE 2 - OLS Compared to Conditional Median Regression
No Multiple Resales
(t values in parenthesis)
C
D
Variable
OLS
Quantile(.5)
AREA
.0003106
(23.47)
-5.10E-09
(-12.92)
.9804511
(18.81)
.1568043
(2.31)
-.030731
(-3.16)
.004208
(1.86)
.0038645
(1.05)
.001706
(12.04)
-18.70716
(-4.72)
-.0002138
(-4.75)
.9183823
(2.97)
-.001094
(-12.26)
-.3211215
(-5.67)
9.367586
(22.77)
2,295
0.69
.0004062
(32.26)
-1.36E-08
(-35.68)
.962186
(19.27)
.0775106
(1.19)
-.034332
(-3.69)
.0019887
(0.92)
.0070505
(2.00)
.0017492
(12.92)
-17.9079
(-4.70)
-.000247
(-5.74)
.9260601
(3.13)
-.001086
(-12.73)
-.270361
(-4.98)
9.07051
(23.15)
2,295
0.47
AREASQ
OIL
ACRYLIC
YRSDEAD
BOOKREFS
MAGREFS
GDP
ΔGDP
SP
ΔSP
SOLD
CA
CONSTANT
N
Adj R2
R2
12
-0.60
-0.40
CA
-0.20
0.00
0.20
FIGURE 1 - Point Values and Confidence Intervals On CA Variable by Price Quantile
0
.2
.4
.6
Quantile
.8
1
13
TABLE 3 - Interquantile Differences in CA Variable
0.05 0.10 0.15 0.20 0.25 0.30 0.35 0.40 0.45 0.50 0.55 0.60 0.65 0.70 0.75 0.80 0.85 0.90
0
0
0
0
0
0
0
0
0
0
0
0
0
*
*
*
*
0
0.05
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
!
0
0.10
0
0
0
0
0
*
!
!
!
!
!
!
!
!
!
0
0.15
0
0
0
0
0
!
!
!
!
!
!
!
!
!
!
0.20
0
0
*
!
!
!
!
!
!
!
!
!
!
*
0.25
*
*
!
!
!
!
!
!
!
!
!
!
*
0.30
0
0
0
!
!
*
0
*
*
!
!
0
0.35
0
0
*
!
0
0
!
!
!
0
0
0.40
0
0
*
!
0
!
!
!
*
0
0.45
0
0
0
0
0
0
!
*
0
0.50
0
0
0
0
0
0
0
0
0.55
0
0
0
0
0
0
0
0.60
0
0
0
0
0
0
0.65
0
0
0
0
0
0.70
0
0
0
0
0.75
0
0
0
0.80
0
0
0.85
0
0.90
!
Indicates the difference in the CA variable between the two quantiles is significant at the 95% confidence level or greater
*
Indicates the difference in the CA variable between the two quantiles is significant at the 90% confidence level
0
Indicates the difference in the CA variable between the two quantiles is not significant
14
TABLE 4 - California Art Resold at Nominal Profit
in California, 1987-2005
Artwork
1
2
3
4
Means
Nominal Resale
Price
$18,800
$19,975
$2,938
$8,250
$12,491
Resale Royalty
940
999
147
413
625
10.89%
10.85%
8.2%
5.37%
8.83%
7.42
2.58
0.33
3.08
3.35
Royalty as % of
Initial Nominal
Price
Time to Resale
(years)
15
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18
Endnotes
1. The law was to become effective January 1, 1977 but it was soon challenged on constitutional
grounds by an art dealers association. The issue was resolved in November 1980 in favor of the
law.
2. The negative effect on a gallery’s incentive to promote an artist is reduced somewhat in the
California case by a provision of the statute that specifically exempts resales by dealers within ten
years of the original sale from the artist to the dealer. Thus, the dealer captures any appreciation
in market value that occurs within this ten-year window.
3. Results of attempts to empirically measure the “death effect” have been mixed. See Agnello
and Pierce (1996); Czujack (1997); and Ekelund, Ressler, and Watson (2000).
4. Kirstein and Schmidtchen (2001) also describe a model of the droit de suite that recognizes the
possible complementarity between early and late produced works of art, but they conclude that the
net impact on the artist’s welfare is ambiguous.
5. With regard to the tax effect of the royalty Perloff (1998) points out that the artist has an
incentive to price discriminate between investors and collectors, but it seems unlikely that their
identities could be consistently determined prior to sale. If there is no price discrimination, and if
the combined tax and quality effects lower market prices on average, it then follows that there will
be opposite effects on the quantities demanded by pure investors and pure collectors. Moreover,
the functional relationship Vc(Pt) for the pure collector may be altered if the price no longer
accurately embodies the intrinsic value of the art. These possible effects are not considered here.
7. Artists who died prior to January 1, 1983 were entitled to the royalty only until death, but the
estates of those dying after that date are entitled to receive it for twenty years after the artist’s
death.
8. http://core.ecu.edu/econ/baysc/research/DDS/Appendix.txt
9. Nine different media were represented in the sample but only oil and acrylic were significant in
any test.
10. Data on per capita income and the unemployment rates in the states of purchase at the times
of sales were tested but showed no association with real prices.
11. The values of the estimated size coefficients imply that price is maximized at about 30,000
square inches. Although both coefficient estimates are highly significant there is only a small
number of paintings of this size or larger in the sample, so estimates of the critical values will be
subject to substantial sampling variability. This is evident in the quantile regression estimates
discussed below.
12. The details of the artist variables estimates are omitted from Tables 1 and 2 but are available
19
at http://core.ecu.edu/econ/baysc/research/DDS/Appendix.txt
13. The museum variable is likely a poor proxy for artist reputation for at least two reasons.
First, it is a simple count of the number of museums holding an artist’s work over the entire
sample period rather that the number of museum representations at the time of each sale. The
latter data were not available. Secondly, the variable as measured treats all museums equally with
respect to their impacts upon artists’ reputations. But it is plausible that reputation effects differ
greatly between a nationally prominent museum and an obscure regional venue.
14. Like the museum measure, BOOKREFS and MAGREFS do not distinguish the relative status
of books or periodicals. Unlike the museum count, however, they measure of the number of
references to the time of sale rather than over the entire sample period.
15. The results were not affected substantively by removing or isolating sales during the two
recessions identified by the NBER over the sample period.
16. Candela and Scorcu (2001); Frey and Pommerehne (1989); Goetzman (1993); Pesando and
Shum (1999); Worthington and Higgs (2002).
17. Because the Resale Royalty variable is a dichotomous variable the percentage impact on the
logged dependent variable is not simply 100 times the estimated coefficient. The transformation
used here is from Halvorsen and Palmquist (1980).
18. See e.g., Buchinsky.
19. See Becker (1995).
20. See e.g., Becker (1995) and de Pierredon-Fawcett (1991).