Exchange / transactions Flashcards
(5 cards)
Conflict
Conflict arises when the interests of the parties involved in a transaction do not align. Mismatched interests, opportunism, different powers and different information play a big role here.
Mutuality
Mutuality is basically shared interest and cooperation between the parties involved in a certain transaction. It makes sure that both parties benefit from the exchange, making it sustainable and desirable for both parties. It has to be voluntarily done, each side needs to gain something and to add some value. Finally, trust and fairness are essential.
Order
Order is the structure of transactions. The causes are market inefficiencies and lack of regulation. The solution could be legal frameworks and ethical practices from everyone so either a lot of trust will be needed, strong strong legal punishments or both.
Property rights (defined by social norms/social capital or formal rules and organisations)
Property rights define ownership and usage of resources, shaped by formal rules or informal norms. Informal property rights rely on community enforcement and are flexible but lack legal protection, while formal property rights offer security and investment potential but can be rigid and costly. Both systems often coexist with governments integrating informal rights into legal frameworks, for example, land titling in developing countries. Strong institutions are crucial for enforcing property rights and promoting economic stability. Balancing social norms with legal systems ensures fair, inclusive, and efficient property rights governance.
Freedom of exchange
Freedom of exchange is the ability of individuals and businesses to trade goods, services, and capital without unnecessary restrictions while the main focus is economic growth and innovation. It allows voluntary transactions, market competition, and consumer choice, this leads to efficient resource allocation. While it promotes prosperity, market failures, inequality, and security concerns may arise without proper oversight. Governments regulate trade through property rights and consumer protections to ensure fairness
