Geography and Social Networks in Nascent Distal Exchange
We design an experiment to explore how geography shapes exchange between spatially distant markets and hypothesize that geographical isolation of traveling intermediaries from stationary sources of production creates social isolation that hinders trade. We characterize our economies with a system of equations derived from Adam Smith: exchange drives specialization, which in turn fuels more exchange, the coupling of which increases welfare. Measures of sociality and the extent of social network exploitation significantly contribute to improved efficiency. We further find that those economies which are the wealthiest are also the most equitable.
Volume (Year): 167 (2011)
Issue (Month): 3 (September)
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