Endogenous Business Networks
Business networks are a feature of the organizational landscape of many countries, though they vary in magnitude. This article develops a theory of business networks where they are endogenous to the reliability of the legal system. Networks are a substitute for reliable institutional support that guarantees written contracts. The existence of networks exerts a negative effect on the functioning of the anonymous market. This is because the network absorbs honest individuals, raising the density of dishonest individuals engaged in anonymous market exchange. Since this lowers the payoff from market exchange, larger networks may be easier to enforce. We find that networks are economically inefficient unless they are relatively large. This is consistent with the view that informal contract enforcement institutions may be inefficient in general equilibrium even though they enhance efficiency in partial equilibrium. Copyright 1999 by Oxford University Press.
To our knowledge, this item is not available for
download. To find whether it is available, there are three
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Volume (Year): 15 (1999)
Issue (Month): 3 (October)
|Contact details of provider:|| Postal: |
Fax: 01865 267 985
Web page: http://jleo.oupjournals.org/Email:
|Order Information:||Web: http://www.oup.co.uk/journals|
When requesting a correction, please mention this item's handle: RePEc:oup:jleorg:v:15:y:1999:i:3:p:615-36. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oxford University Press)or (Christopher F. Baum)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.