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Interlocked Village Markets and Trader Idiosyncrasy in Rural India
Author(s) -
Subramanian Arjunan,
Qaim Matin
Publication year - 2011
Publication title -
journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.157
H-Index - 61
eISSN - 1477-9552
pISSN - 0021-857X
DOI - 10.1111/j.1477-9552.2011.00309.x
Subject(s) - idiosyncrasy , repeal , reciprocity (cultural anthropology) , economics , commodity market , business , presumption , commodity , financial economics , monetary economics , market economy , finance , law , psychology , political science , social psychology
The role of traders and traditional exchange institutions has received little attention in empirical research on rural markets in developing countries. We use detailed data on transactions in a village commodity market in India and identify two observed anomalies: first, the repeal of the law of one price, and second, a trader‐idiosyncratic effect, namely that large volumes are sold to a trader who does not offer the best price. Econometric analysis demonstrates that trader idiosyncrasy can largely be explained by reciprocity motives in interlocked village markets. Reciprocity leads to market inefficiencies and can result in unexpected supply responses.