I think the art market is a completely different thing to almost any other market. It combines both 'material value' and 'artistic value' into one price and really only reflects the agreement between the buyer and the seller over what the thing is worth. Trying to work out how much film, paper and chems the guy put into it and then adding a margin is useless. I bought a house recently and I know the bricks, mortar and paint are worth a lot less than what I paid for it.
The article Mick quotes mentions Jackson Pollock's Blue Poles that was bought for $A2m in the 70s by the National Gallery of Australia and caused a public outcry with people questioning it's artistic value. There is no question these days that Blue Poles is a very very significant piece and that the NGA got a bargain. Someone offered them $US100m for it a few years back. That's about a 14% rate of return. Not too bad!