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

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.


Issue Date:
1999
Publication Type:
Working or Discussion Paper
PURL Identifier:
http://purl.umn.edu/11546
Total Pages:
30
Series Statement:
Staff Paper 99-22




 Record created 2017-04-01, last modified 2017-08-23

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