IDEAS home Printed from https://ideas.repec.org/p/grz/wpaper/2024-12.html
   My bibliography  Save this paper

Market building by strategic interactions: The role of powerful private actors and the state

Author

Listed:
  • Katja Kalkschmied

    (Vienna School of International Studies, Austria)

  • Joern Kleinert

    (University of Graz, Austria)

Abstract

We analyse the building of markets, the central institutions in modern societies. We base our analysis on a game-theoretic approach that formalises how markets are built in a decentralised manner by the strategic interactions of actors whose expectations have to be aligned. Markets organize economic exchange among many participants whose action choices may be anonymous and simultaneous but always are interdependent. Private and state actors invest in the building of markets to reduce transaction costs and enable growth. Those who invest in market building critically influence which of the many possible market solutions evolve. In three case studies, we describe how private investment in information management, as well as standardisation and the development of products, creates and stabilises markets. We discuss how the state uses regulation, market participation, information management, and public investment to ensure that private initiatives can take place and that what evolves out of private initiatives remains in accordance with societal goals.

Suggested Citation

  • Katja Kalkschmied & Joern Kleinert, 2024. "Market building by strategic interactions: The role of powerful private actors and the state," Graz Economics Papers 2024-12, University of Graz, Department of Economics.
  • Handle: RePEc:grz:wpaper:2024-12
    as

    Download full text from publisher

    File URL: https://unipub.uni-graz.at/obvugrveroeff/download/pdf/9891125?originalFilename=true
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Searle, John R., 2015. "Status functions and institutional facts: reply to Hindriks and Guala," Journal of Institutional Economics, Cambridge University Press, vol. 11(3), pages 507-514, September.
    2. Martin Berka & Michael B. Devereux & Thomas Rudolph, 2011. "Price setting in a leading Swiss online supermarket," CAMA Working Papers 2011-19, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    3. Hoff, Karla & Stiglitz, Joseph E., 2016. "Striving for balance in economics: Towards a theory of the social determination of behavior," Journal of Economic Behavior & Organization, Elsevier, vol. 126(PB), pages 25-57.
    4. Rodrik, Dani, 2012. "The Globalization Paradox: Why Global Markets, States, and Democracy Can't Coexist," OUP Catalogue, Oxford University Press, number 9780199652525.
    5. Barro, Robert J & Gordon, David B, 1983. "A Positive Theory of Monetary Policy in a Natural Rate Model," Journal of Political Economy, University of Chicago Press, vol. 91(4), pages 589-610, August.
    6. Greif, Avner & Mokyr, Joel, 2017. "Cognitive rules, institutions, and economic growth: Douglass North and beyond," Journal of Institutional Economics, Cambridge University Press, vol. 13(1), pages 25-52, March.
    7. Dolata, Ulrich, 2017. "Apple, Amazon, Google, Facebook, Microsoft: Market concentration - competition - innovation strategies," Research Contributions to Organizational Sociology and Innovation Studies, SOI Discussion Papers 2017-01, University of Stuttgart, Institute for Social Sciences, Department of Organizational Sociology and Innovation Studies.
    8. Barzel,Yoram & Allen,Douglas W., 2023. "Economic Analysis of Property Rights," Cambridge Books, Cambridge University Press, number 9781009374729, October.
    9. Aoki, Masahiko, 2015. "Why is the equilibrium notion essential for a unified institutional theory? A friendly remark on the article by Hindriks and Guala," Journal of Institutional Economics, Cambridge University Press, vol. 11(3), pages 485-488, September.
    10. Martin Berka & Michael B. Devereux & Thomas Rudolph, 2011. "Price setting in a leading Swiss online supermarket," CAMA Working Papers 2011-19, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Fedoseeva, Svetlana & Grein, Theresa & Herrmann, Roland, 2017. "How German Online Retailers Price Foods: An Empirical Analysis for Chocolate Products," International Journal on Food System Dynamics, International Center for Management, Communication, and Research, vol. 8(1), pages 1-13, January.
    2. Chakraborty, Ratula & Dobson, Paul W. & Seaton, Jonathan S. & Waterson, Michael, 2015. "Pricing in inflationary times: The penny drops," Journal of Monetary Economics, Elsevier, vol. 76(C), pages 71-86.
    3. Hirokazu Takizawa, 2017. "Masahiko Aoki’s conception of institutions," Evolutionary and Institutional Economics Review, Springer, vol. 14(2), pages 523-540, December.
    4. Carsten Herrmann-Pillath, 2017. "Institutional naturalism: reflections on Masahiko Aoki’s contribution to institutional economics," Evolutionary and Institutional Economics Review, Springer, vol. 14(2), pages 501-522, December.
    5. Frolov, Daniil, 2019. "The manifesto of post-institutionalism: institutional complexity research agenda," MPRA Paper 97662, University Library of Munich, Germany.
    6. Juan M. C. Larrosa & Victoria Giordano & Gonzalo R. Ramírez Muñoz de Toro & Juan I. Uriarte, 2022. "Marketing attributes in yogurt weekly pricing in Argentina," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 21(3), pages 332-343, June.
    7. Frolov, Daniil, 2019. "Постинституционализм: Программа Исследований За Пределами Институционального Мейнстрима [Post-institutionalism: research program beyond the institutional mainstream]," MPRA Paper 92328, University Library of Munich, Germany.
    8. Hoff,Karla & Jalan,Jyotsna & Santra,Sattwik, 2021. "Participatory Theater Empowers Women : Evidence from India," Policy Research Working Paper Series 9680, The World Bank.
    9. Fedoseeva, Svetlana & Herrmann, Roland & Nickolaus, Katharina, 2017. "Was the economics of information approach wrong all the way? Evidence from German grocery r(E)tailing," Journal of Business Research, Elsevier, vol. 80(C), pages 63-72.
    10. Lloyd, T.A. & McCorriston, S. & Morgan, C.W. & Poen, E. & Zgovu, E., 2014. "Retail price dynamics and retailer heterogeneity: UK evidence," Economics Letters, Elsevier, vol. 124(3), pages 434-438.
    11. Holzer, Patrick Sebastian, 2020. "The effect of time-varying factors on promotional activity in the German milk market," Journal of Retailing and Consumer Services, Elsevier, vol. 55(C).
    12. Cukierman, Alex & Lippi, Francesco, 2001. "Labour Markets and Monetary Union: A Strategic Analysis," Economic Journal, Royal Economic Society, vol. 111(473), pages 541-565, July.
    13. Winkler, Bernhard, 2000. "Which kind of transparency? On the need for clarity in monetary policy-making," Working Paper Series 0026, European Central Bank.
    14. Bill Dupor, 2005. "Keynesian Conundrum: Multiplicity and Time Consistent Stabilization," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 8(1), pages 154-177, January.
    15. Joseph Stiglitz, 2018. "From manufacturing-led export growth to a twenty-first-century inclusive growth strategy: Explaining the demise of a successful growth model and what to do about it," WIDER Working Paper Series 176, World Institute for Development Economic Research (UNU-WIDER).
    16. Cukierman, Alex & Spiegel, Yossi & Leiderman, Leonardo, 2004. "The choice of exchange rate bands: balancing credibility and flexibility," Journal of International Economics, Elsevier, vol. 62(2), pages 379-408, March.
    17. Christian Hellwig, 2004. "Heterogeneous Information and the Benefits of Public Information Disclosures (October 2005)," UCLA Economics Online Papers 283, UCLA Department of Economics.
    18. repec:zbw:bofitp:1999_009 is not listed on IDEAS
    19. Svensson, Lars E. O., 1997. "Inflation forecast targeting: Implementing and monitoring inflation targets," European Economic Review, Elsevier, vol. 41(6), pages 1111-1146, June.
    20. Paul Levine & Alex Mandilaras & Jun Wang, 2008. "Public Debt Maturity And Currency Crises," Scottish Journal of Political Economy, Scottish Economic Society, vol. 55(1), pages 79-106, February.
    21. Alex Cukierman & Anton Muscatelli, 2001. "Do Central Banks have Precautionary Demands for Expansions and for Price Stability?," Working Papers 2002_4, Business School - Economics, University of Glasgow, revised Mar 2002.

    More about this item

    Keywords

    Strategic interactions; Market building; Private investment; State intervention.;
    All these keywords.

    JEL classification:

    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • P51 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:grz:wpaper:2024-12. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Stefan Borsky (email available below). General contact details of provider: https://edirc.repec.org/data/vgrazat.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.