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Handbook of Trust Research

Edited by Reinhard Bachmann and Akbar Zaheer

The Handbook of Trust Research presents a timely and comprehensive account of the most important work undertaken in this lively and emerging field over the past ten to fifteen years. Presenting a broad range of approaches to issues on trust, the Handbook features 22 articles from a variety of disciplines on the study of trust in both organizational and societal contexts. With contributions from some of the most eminent names in the field of trust research, this international collaboration is an imaginative and informative reference tool to aid research in this engaging area for years to come.
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Chapter 18: Trust and Markets

Jens Beckert


Jens Beckert1 Markets are the core institution of capitalism. Without markets, no system of division of labor, even remotely as sophisticated as the one established today, could have developed. Without markets, no system of competition could have emerged that enforces the efficient production of goods and provision of services. Without markets, the distribution of material resources would need to be regulated by non-economic criteria. While these consequences of market exchange have been widely acknowledged, it is much less well understood under what conditions markets can come into existence and thrive. One precondition is the supply of products that are in demand. Moreover, markets need at least some institutional safeguards that protect sellers and buyers from fraud, violence and free-riding. Economic sociologists (Granovetter 1985; Fligstein 2001) and institutional economists (Williamson 1975) have explored the institutional preconditions of markets in recent years, including the roles of state regulation, hierarchical organization, social networks and culturally anchored scripts and routines. In this chapter I argue that the availability of exchangeable products and institutional provisions is a necessary but insufficient condition for the existence of markets. A further constitutive element of most markets is trust between the exchange partners. By trust I refer to each exchange partner’s expectation2 that his one-sided advance concession in a transaction will not be exploited by the other person through defection, although defection would generate extra profit for him. Although trust (and mistrust) is a universal aspect of social relations, it only becomes an analytically important issue...

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