Market Value without a Market: Perspectives from Transaction Cost Theory

The concept of market value is central to the valuation profession worldwide. Estimating market value remains the core professional activity of valuers and underpins much funding and investment decision-making. There is evidence however, that industry leaders are increasingly sceptical about the valuersí skills. The valuers themselves however still remain hugely influential in the market. This paper engages with the question why valuers remain important despite the parlous state of their craft. Using insights, provided by transaction cost theory this paper argues that in many cases market value cannot legitimately be determined. This is because market conditions necessary for its emergence as a knowable, determinate and autonomous figure or range of figures do not exist. The paper proposes an alternative view of market value which emphasises its role as a transaction cost minimising device.