2011/14 | LEM Working Paper Series | |
The Emergence and Impact of Market Institutions: The Wholesale Market for Fish and Other Perishable Commodities |
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Sandro Sapio, Alan Kirman, Giovanni Dosi |
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Keywords | ||
Fish markets, market institutions, aggregation, learning
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JEL Classifications: | ||
F2; M14; K0; C23
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Abstract | ||
This work introduces a special issue of the Journal of Economic
Behavior and Organization on the emergence and impact of market
institutions in wholesale fish markets. The analysis of fish markets
has a respectable pedigree also in terms of the description of how
they function. A major advantage of the analysis of fish markets in
this literature is that it often gathers and exploits information that
is typically not available in official market statistics. A full
understanding of market dynamics, for example, is easier to obtain if
one can observe not only the final outcomes of bilateral transactions
which are not observed by other market participants, but also the
so-called "transactions that did not happen", i.e. offers and
counteroffers that were refused by the trading parties. Fish markets
exhibit two features that make their analysis appealing for
economists. On the one hand, fish is a perishable good, and because
stocks cannot be carried over from one day to the next, the formal
analysis of this market is simpler. Indeed, with no inventories,
successive market sessions can be thought of as independent, at least
approximately. The second intriguing feature is that the organization
of fish markets varies from location to location with little obvious
reason, some with pairwise trading, where prices are not posted, and
others based on auctions, where, by definition, price information is
centralized and publicly available. Such observed differences help
also in in understanding how individual learning and adaptation take
place under different market architectures, how markets adjust to
disequilibria, and to what extent collective rationality is rooted in
individual rationality. The research questions covered by the selected
papers include, first, the impact of decentralized pair-wise
bargaining versus centralized auctions on the statistical properties
of fish prices and traded volumes; and second, the ways
information-processing, decision-making capabilities and behavioral
rules are deployed by agents and influenced by market set-ups and
market size.
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