Reinventing the Bazaar Quotes

“Rembrandt was an innovator not only in painting but also in commerce. He helped establish a full-fledged art market in seventeenth-century Amsterdam. “Rembrandt’s obsession with the intricacies of the market system permeated his life and his work,”
― John McMillan, Reinventing the Bazaar: A Natural History of Markets

“In other words, certain kinds of transaction costs have been lowered by the internet: the cost of acquiring information, the time, effort, and money needed to learn what is available where and at what price.”
― John McMillan, Reinventing the Bazaar: A Natural History of Markets

“They cannot operate efficiently in a vacuum.”
― John McMillan, Reinventing the Bazaar: A Natural History of Markets

“However, lowering transaction costs is a task not only for entrepreneurs, but also for public policy. The government has the responsibility to establish and maintain an environment within which markets can work efficiently. (I will refer to this aspect of market design as formal or top-down.)”
― John McMillan, Reinventing the Bazaar: A Natural History of Markets

“Trust is needed also in transactions that take time to complete. People are reluctant to invest in the absence of some assurance that the others’ promises will be kept. For these and other reasons, a modern market economy needs a platform sturdy enough to support highly complex dealings.”
― John McMillan, Reinventing the Bazaar: A Natural History of Markets

“An uneven distribution of information hinders negotiations and limits what can be contracted. Information transmission requires devices that ensure the communications are reliable. Another such issue is that a market works well only if people can trust each other. Trust requires mechanisms to bolster it since, regrettably, not everyone is inherently trustworthy.”
― John McMillan, Reinventing the Bazaar: A Natural History of Markets

“A still more extreme market malfunction occurs if the costs of transacting are so high as to swamp any potential benefits from the deal. Transaction costs can thwart exchanges that would otherwise be worthwhile. Unemployment exists, for example, not simply because there are too few jobs, but also because transaction costs in the labor market prevent some employers and job seekers from connecting with each other. A new way of doing business that lowers transaction costs can benefit everyone.”
― John McMillan, Reinventing the Bazaar: A Natural History of Markets

“Transaction costs use up resources in ways that are unrelated to the actual value of the business to be done. In the extreme, transaction costs can cause markets to be dysfunctional.”
― John McMillan, Reinventing the Bazaar: A Natural History of Markets

“In putting an agreement together, there are further transaction costs. Negotiations can be drawn out. Bargainers sometimes overreach in trying to squeeze out a good bargain, causing an impasse and spoiling what could have been a mutually beneficial deal. After the fact, there are still other transaction costs. Monitoring work costs time and money. The enforcement of contracts and the prevention and settling of disputes do not come for free. If agreements are not watertight, productive opportunities may be forgone.”
― John McMillan, Reinventing the Bazaar: A Natural History of Markets

“Transaction costs can arise before any business is done. Locating potential trading partners may be costly and time-consuming. Comparing alternative sellers and choosing among them takes effort by the buyer. The quality of the goods for sale is often not immediately apparent, and the buyer may have to go to some trouble to evaluate it. If it cannot be reliably checked, the buyer might be reluctant to purchase.”
― John McMillan, Reinventing the Bazaar: A Natural History of Markets

“These costs include the time, effort, and money spent in the process of doing business—both those incurred by the buyer in addition to the actual price paid, and those incurred by the seller in making the sale.11”
― John McMillan, Reinventing the Bazaar: A Natural History of Markets

“Economists occasionally tell better stories than novelists,” remarked the novelist Mario Vargas Llosa. 1 My task is to try to live up to Vargas Llosa’s observation. The raw material is rich. The story of markets is full of human ingenuity and creativity—as well as disappointment and failure.”
― John McMillan, Reinventing the Bazaar: A Natural History of Markets

“A workable platform has five elements: information flows smoothly; property rights are protected; people can be trusted to live up to their promises; side effects on third parties are curtailed; and competition is fostered.”
― John McMillan, Reinventing the Bazaar: A Natural History of Markets

“Most of Vietnam’s trucks were broken down in the early 1990s, according to Le Dang Doanh, head of the Central Institute for Economic Management, a Hanoi think tank. Imported from the Soviet Union, built using Soviet technology and production methods, they were notoriously unreliable. To make matters worse, the collapse of the Soviet Union had made spare parts unobtainable. Without trucks, the nation faced a transportation crisis. Out of desperation, the government granted each driver an ownership stake in his truck. “It’s a miracle!” Le Doanh wryly observed. “Suddenly, all the trucks run.”
― John McMillan, Reinventing the Bazaar: A Natural History of Markets