Market Emergence, Trust and Reputation
AbstractFirst draft: February 1996. This draft: November 1996. Drawing insights from survey work on enterprise finance and from the literature on credit and labor markets, this paper investigates the spontaneous emergence of markets in the presence of heterogeneous agents and commitment failure. We show that courts and other formal market institutions are not a prerequisite for market exchange to take place. Fully decentralized markets can spontaneously emerge and discipline themselves. Exchange is not anonymous but based on mutual trust and on the sharing of information among agents. Economic efficiency is not fully achieved. Screening costs lead to closed-shop markets and segmented equilibria. The permanent exclusion of cheaters from future trade can be self-enforcing and self-emerging if breach of contract is interpreted as a sign of impending bankruptcy.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Stanford University, Department of Economics in its series Working Papers with number 96016.
Date of creation:
Date of revision:
Contact details of provider:
Postal: Ralph Landau Economics Building, Stanford, CA 94305-6072
Web page: http://www-econ.stanford.edu/econ/workp/
More information through EDIRC
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Oomes, Nienke, 2003.
"Local trade networks and spatially persistent unemployment,"
Journal of Economic Dynamics and Control,
Elsevier, vol. 27(11-12), pages 2115-2149, September.
- Nienke Oomes, 2002. "Local Trade Networks and Spatially Persistent Unemployment," International Trade 0211004, EconWPA.
- Gagliardi, Francesca, 2008. "Institutions and economic change: A critical survey of the new institutional approaches and empirical evidence," The Journal of Socio-Economics, Elsevier, vol. 37(1), pages 416-443, February.
- weijland, Hermine, 1999. "Microenterprise Clusters in Rural Indonesia: Industrial Seedbed and Policy Target," World Development, Elsevier, vol. 27(9), pages 1515-1530, September.
- Javier Escobal D’Angelo, 2001. "Costos de transacción en la agricultura peruana: una primera aproximación a su medición e impacto," Documentos de InvestigaciÃ³n dt30, Grupo de Análisis para el Desarrollo (GRADE).
- Fafchamps, Marcel, 1997. "Trade credit in Zimbabwean manufacturing," World Development, Elsevier, vol. 25(5), pages 795-815, May.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Thomas Krichel).
If references are entirely missing, you can add them using this form.