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The multi‐layer governance of incomplete market Research based on comparative institutional experimentation

The multi‐layer governance of incomplete market Research based on comparative institutional... Purpose – The purpose of this paper is to focus on the characteristics, efficiencies and interaction of many alternative market governance modes, by the approach of comparative institutional experimentation. Design/methodology/approach – First, a highly simplified model of market economy is developed, which is embedded in a three‐layer governance structure. Then the model is transplanted into laboratory experimentation, so the characteristics and efficiencies of different governance modes can be identified by observing the subjects' behaviors under them. Findings – The experimental results show that the market with governance structure based on rule is more efficient than the market with governance only based on long relation and based on preference or belief, and the dynamic improvement of governance based on rule has a destructive effect on the governance based on relation and governance based on preference or belief. Originality/value – These results have profound implications for the development or enhancement of market institutions in transition or developing countries. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Nankai Business Review International Emerald Publishing

The multi‐layer governance of incomplete market Research based on comparative institutional experimentation

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Publisher
Emerald Publishing
Copyright
Copyright © 2010 Emerald Group Publishing Limited. All rights reserved.
ISSN
2040-8749
DOI
10.1108/20408741011052555
Publisher site
See Article on Publisher Site

Abstract

Purpose – The purpose of this paper is to focus on the characteristics, efficiencies and interaction of many alternative market governance modes, by the approach of comparative institutional experimentation. Design/methodology/approach – First, a highly simplified model of market economy is developed, which is embedded in a three‐layer governance structure. Then the model is transplanted into laboratory experimentation, so the characteristics and efficiencies of different governance modes can be identified by observing the subjects' behaviors under them. Findings – The experimental results show that the market with governance structure based on rule is more efficient than the market with governance only based on long relation and based on preference or belief, and the dynamic improvement of governance based on rule has a destructive effect on the governance based on relation and governance based on preference or belief. Originality/value – These results have profound implications for the development or enhancement of market institutions in transition or developing countries.

Journal

Nankai Business Review InternationalEmerald Publishing

Published: Jun 4, 2010

Keywords: Market forces; Market economy; Governance; Modelling

References