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On the expansion of the market and the decline of the family

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  • Joel Guttman

    ()

  • Nira Yacouel

    ()

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    Abstract

    Over 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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    File URL: http://hdl.handle.net/10.1007/s11150-007-9003-4
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    Bibliographic Info

    Article provided by Springer in its journal Review of Economics of the Household.

    Volume (Year): 5 (2007)
    Issue (Month): 1 (March)
    Pages: 1-13

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    Handle: RePEc:kap:reveho:v:5:y:2007:i:1:p:1-13

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    Web page: http://www.springerlink.com/link.asp?id=109451

    Related research

    Keywords: Reputation; Family; Theory of the firm; J12; L14; L25;

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    References

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    1. Katz, Eliakim & Rosenberg, Jacob, 2005. "An economic interpretation of institutional volunteering," European Journal of Political Economy, Elsevier, vol. 21(2), pages 429-443, June.
    2. Caplan, Bryan, 2003. "Stigler-Becker versus Myers-Briggs: why preference-based explanations are scientifically meaningful and empirically important," Journal of Economic Behavior & Organization, Elsevier, vol. 50(4), pages 391-405, April.
    3. Guttman, Joel M., 2001. "Self-enforcing reciprocity norms and intergenerational transfers: theory and evidence," Journal of Public Economics, Elsevier, vol. 81(1), pages 117-151, July.
    4. Bisin, A. & Verdier, T., 1997. "On the Cultural Transmission of Preferences for Social Status," DELTA Working Papers 97-04, DELTA (Ecole normale supérieure).
    5. Akerlof, George A, 1983. "Loyalty Filters," American Economic Review, American Economic Association, vol. 73(1), pages 54-63, March.
    6. Becker, Gary S, 1993. "Nobel Lecture: The Economic Way of Looking at Behavior," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 385-409, June.
    7. Bernstein, Lisa, 1992. "Opting Out of the Legal System: Extralegal Contractual Relations in the Diamond Industry," The Journal of Legal Studies, University of Chicago Press, vol. 21(1), pages 115-57, January.
    8. Smith, James P & Ward, Michael P, 1985. "Time-Series Growth in the Female Labor Force," Journal of Labor Economics, University of Chicago Press, vol. 3(1), pages S59-90, January.
    9. Joel M. Guttman, 2003. "Repeated interaction and the evolution of preferences for reciprocity," Economic Journal, Royal Economic Society, vol. 113(489), pages 631-656, 07.
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    Cited by:
    1. Alberto Alesina & Yann Algan & Pierre Cahuc & Paola Giuliano, UCLA, 2010. "Family Values and the Regulation of Labor," Working Papers 2010.56, Fondazione Eni Enrico Mattei.

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