How ethnic kin-based trading networks can rely on trust when a well-developed framework of contract laws is missing
Trust, Ethnicity, and Identity deals with the economic role of laws and institutions in achieving social order in a decentralized economy. Specifically, this book considers the coordinating role of three major nonprice institutions--ethnic trading networks, contract law, and gift-exchange--in economizing on transaction costs and thus facilitating the process of exchange in decentralized economies in different historical contexts.
The major unifying theme of the book is this: identity matters when traders operate in an environment characterized by contract uncertainty, where the legal framework for the enforcement of contracts is not well developed. This in turn points out the importance of trust embedded in particularistic exchange relations such as kinship or ethnicity.
One unique facet of this book is that the author uses a property rights--public choice approach--part of the New Institutional Economics--to provide a unifying theoretical framework to explain such diverse exchange institutions as contract law, ethnic trading networks, and gift-exchange, In addition, it goes beyond the New Institutional Economics paradigm by incorporating some crucial concepts from sociology, anthropology, and bioeconomics, such as social structure, social norms, culture, reciprocity, and kin-related altruism. This broad interdisciplinary framework gives Landa's work a relevance beyond economics to law, political science, sociology, anthropology, and bioeconomics.