"Though economists claim that dollar bills will not be left 'lying in the street,' the profits from sharply focused exchange between sociologists and economists are rarely taken. This sparkling volume is a welcome exception. Prominent practitioners of both arts present important work on networks and markets, and critique one another in concise and fruitful ways. An invaluable resource for those who follow these exciting new developments in social theory."
- MARK GRANOVETTER, Stanford University
"A pioneering collaboration between economists and sociologists. The contributors compete and cooperate with each other, combining the best traditions of the two fields, to elucidate the organization of industrial economies in East Asia, fish markets in Marseille, banking in renaissance Florence, ethnic business networks in New York, and much else."
- DANI RODRIK, Harvard University
"After a century of separation, economics and other social sciences are reestablishing mutually beneficial links. These studies of the interaction between social networks and markets are an excellent case in point. Here, a dozen sociologists and economists bring together their skills in case studies and theoretical modeling to create a rich and fascinating collection that will inspire much further research."
-AVINASH K. DIXIT, Princeton University
Networks and Markets argues that economists' knowledge of markets and sociologists' rich understanding of networks can and should be combined. Together they can help us achieve a more coherent view of economic life, where transactions follow both the logic of economic incentives and the established channels of personal relationships.
Market exchange is impersonal, episodic, and carried out at arm's length. All that matters is how much the seller is asking, and how much the buyer is offering. An economic network, by contrast, is based upon more personalized and enduring relationships between people tied together by more than just price. Networks and Markets focuses on how the two concepts relate to each other: Are social networks an essential precondition for successful markets, or do networks arise naturally out of markets, as faceless traders build reputations and gain confidence in each other?
The book includes contributions by both sociologists and economists, applying the concepts of markets and networks to concrete empirical phenomena. Among the topics analyzed, the book explains how, in Taiwan, South Korea, and Japan, firms combine into tightly-knit business blocs, how wholesalers in a Marseille fish market earn the loyalty of customers, and how ethnic retailers in the U.S. share valuable market information with other shopkeepers from their ethnic group. A response to each chapter discusses the issue from the standpoint of the other discipline. Sociologists are challenged to go beyond small-scale economic exchange and to integrate their concept of networks into a broader understanding of the economic system as a whole, while economists are challenged to consider the economic implications of network ties, which can be strong or weak, unconditional or highly contingent.
This book proves that both economics and sociology provide stronger insights when they study markets and networks as parallel forms of exchange. But it also clarifies the healthy division of labor that remains between the two disciplines. Sociologists are adept at showing how markets are framed by social institutions; economists specialize in explaining how markets perform, taking the social context as a given. Networks and Markets showcases what each discipline does best and reveals where each discipline would do better by borrowing from the other.
JAMES E. RAUCH is professor of economics at the University of California, San Diego.
ALESSANDRA CASELLA is professor of economics at Columbia University.
CONTRIBUTORS: Ronald. S Burt, Gregory Basharov, Robert C. Feenstra, Neil Fligstein, Avner Greif, Gary C. Hamilton, Deng-Shing Huang, Alan Kirman, John F. Padgett, Rebeca Raijman, Joel Sobel, Marta Tienda.