Original scientific paper
https://doi.org/10.1080/1331677X.2019.1677260
Exchange networks, markets and trust
Jon Reiersen
; School of Business, University of South-Eastern Norway, Borre, Norway
Abstract
Network-based transactions are attractive as a system for economic exchange because they give network members greater protection against opportunism and exchange hazards compared to more anonymous market transactions. At the same time, net- works restrict the possibilities to exploit economies of scale and other efficiency enhancing properties of markets. When the problem-solving capacity of networks do not make up for the losses generated by not trading with outsiders, trust is important to promote transactions among strangers in the anonymously market. This paper offers an economic analysis of this idea. With the help of a social evolutionary model, it is also demonstrated that mutual trust relations can survive in the anonymous market, even when there is a clear danger of opportunism, and the conventional mechanisms like repetitions and contracts are ruled out.
Keywords
Networks; trade opportunism trust
Hrčak ID:
229742
URI
Publication date:
22.1.2019.
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