SOCIAL CAPITAL, THE TERMS OF TRADE, AND THE DISTRIBUTION OF INCOME

Lindon Robison, Robert Myers (myersr@msu.edu) and Marcelo E. Siles

No 11546, Staff Paper Series from Michigan State University, Department of Agricultural, Food, and Resource Economics

Abstract: Social capital, a person or group's sympathy or sense of obligation for another person or group, assumes relationships can alter the terms of trade and the likelihood of trades between individuals. Other important economic consequences of social capital result from its ability to internalize externalities. This paper introduces social capital into the neoclassical model to derive forecasts of how relationships will alter the minimum-sell prices of farmland and the likelihood of trades between persons with different relationships. Also deduced in this paper is the effect of social capital on the level and dispersion of benefits from trade. Empirical evidence from a 1,500 farmland owner-operator survey is analyzed and provides support for the social capital paradigm.

Keywords: Institutional and Behavioral Economics; International Relations/Trade (search for similar items in EconPapers)
Pages: 30
Date: 1999
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:midasp:11546

DOI: 10.22004/ag.econ.11546

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