On the expansion of the market and the decline of the family
AbstractOver the past two hundred years, large, modern firms have tended to replace small, family businesses. In parallel, the family has declined as a social institution. We suggest that these developments are interrelated. Because information of cheating in market transactions spreads only gradually in large markets, the reputation of the family firm could support contractual performance only in small, traditional markets. As markets grew in size, this reputational mechanism could no longer operate. The small, family firm was then replaced by the large, modern firm. This transition led to a decrease in the importance of the family. Copyright Springer Science+Business Media, LLC 2007
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Bibliographic InfoArticle provided by Springer in its journal Review of Economics of the Household.
Volume (Year): 5 (2007)
Issue (Month): 1 (March)
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Web page: http://www.springerlink.com/link.asp?id=109451
Reputation; Family; Theory of the firm; J12; L14; L25;
Find related papers by JEL classification:
- J12 - Labor and Demographic Economics - - Demographic Economics - - - Marriage; Marital Dissolution; Family Structure
- L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
- L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
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