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

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  • Joel Guttman

  • Nira Yacouel

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

Suggested Citation

  • Joel Guttman & Nira Yacouel, 2007. "On the expansion of the market and the decline of the family," Review of Economics of the Household, Springer, vol. 5(1), pages 1-13, March.
    • Handle: RePEc:kap:reveho:v:5:y:2007:i:1:p:1-13
    DOI: 10.1007/s11150-007-9003-4
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    References listed on IDEAS

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    10. 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.
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    1. repec:spo:wpmain:info:hdl:2441/20g3idj0jd9iqosvjjdcbu44lu is not listed on IDEAS
    2. Alberto Alesina & Yann Algan & Pierre Cahuc & Paola Giuliano, 2015. "Family Values And The Regulation Of Labor," Journal of the European Economic Association, European Economic Association, vol. 13(4), pages 599-630, August.
    3. Fishman, Arthur & Finkelstein, Israel & Simhon, Avi & Yacouel, Nira, 2018. "Collective brands," International Journal of Industrial Organization, Elsevier, vol. 59(C), pages 316-339.
    4. Amitabh Anand & Attila Wieszt & Éva Vajda, 2025. "Decoding the dark sides of family business: a synthesis, and future research agenda," Review of Managerial Science, Springer, vol. 19(11), pages 3563-3606, November.
    5. Alberto Alesina & Yann Algan & Pierre Cahuc & Paola Giuliano, 2015. "Family Values And The Regulation Of Labor," Journal of the European Economic Association, European Economic Association, vol. 13(4), pages 599-630, August.

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    More about this item

    Keywords

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    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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