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I believe that the art market could do without the auction, however the sales process of art would likely be much slower, and possibly less organized. One of the advantages of the auction is that it allows one to avoid the time-consuming politicking expected by primary dealers, who, in the interests of building their artists' careers, try to sell only to collectors who have the right reputation. Artists too would likely have a difficult time selling their pieces3. Many artists claim that selling their pieces can be a depressing activity. Because they are associated a monetary value with their pieces the process is comparable to selling one of their children. Essentially it is a difficult process that is avoided via auctions. So with auctions, sales seem much more straightforward and emotionless. Without the auction, it is likely that selling are would become more tedious, time-consuming, and emotionally draining.
References:
- Ashenfelter O, Graddy K: Anatomy of the Rise and fall of a Price Fixing Conspiracy: Auctions at Sotheby's and Christie's. Journal f Competition Law and Economics, 1:3-20, 2005.
- http://www.icmrindia.org/casestudies/catalogue/Business%20Ethics/Business%20Ethics%20-%20Ethical%20Issues%20at%20Christie.htm
- Thornton, Sarah. Seven Days in the Art World. New York: W.W. Norton, 2008. Print.