Geography of Valution: a Real World Laboratory Aproach

In recent years we could observe a revival of cities, connected to an augmented concentration of creative activities in certain neighborhoods. Existing arguments explain this connection of urban growth by creative and highly qualified in-migration as driven by consumption and propensities for amenities. Yet, these approaches cannot explain the changing geography of production. Therefore, we argue that the valuation of knowledge, i.e. the negotiation about what is of value, is a crucial driver for geographical concentration. We base our argument on the necessity for geographical proximity when negotiating values under conditions of uncertainties. We exemplify our argument that valuation leads to concentration under conditions of uncertainty by using two art fairs as real world laboratories: the Art Basel and the SCOPE. We found that under conditions of uncertainty, negotiations about value require permanent interactions and result in volatile markets. From this insight, we derive expectations about an economic geography of valuation.