6 - Business is Secret: Government Threats and Within-Group Competition

Summary

Chapter 6 first tests the main premise of the project – that external threats should make private trade-promoting policies more likely – using the large sample of markets represented in the survey data. It then assesses whether (and how) competition mediates the role of these threats. Just as important, the chapter uses the survey data to assess alternative explanations that have been posited but rarely tested in the context of private governance with a sample of this size. The key finding is that markets facing government threats – i.e., those on local government land – are more likely to be governed well. This relationship between land type and private governance, however, is not uniform. It depends on the diversity of products sold in a market. Public land markets are governed better when they sell a variety of products, since traders are in less direct competition with each other.