About the Talk
Property rights are important for economic exchange, but in much of the world they are not publicly guaranteed. Private market associations can fill this gap by providing an institutional structure to enforce agreements, but with this power comes the ability to extort from group members. Under what circumstances do private associations provide a stable environment for economic activity? Using survey data collected from 1,179 randomly sampled traders across 199 markets in Lagos, I find that markets maintain institutions to support trade not in the absence of government, but rather in response to active government interference.
I argue that associations develop pro-trade institutions when threatened by politicians they perceive to be predatory, and when the organization can respond with threats of its own; the latter is easier when traders are not competing with each other. In order to maintain this balance of power, the association will not extort because it needs trader support to maintain the credibility of its threats to mobilize against predatory politicians.
About the Speaker:
Shelby Grossman is a research scholar at the Stanford Internet Observatory. She was previously an assistant professor of political science at the University of Memphis. Dr. Grossman’s primary research interests are in comparative politics and sub-Saharan Africa. Her research has been published in Comparative Political Studies, PS: Political Science and Politics, World Development, and World Politics.