Whom do you trust? The determinants of loyalty in a market without quality signals
Abstract In markets devoid of explicit quality signals and characterized by resource scarcity, understanding loyalty determinants is crucial for market efficiency. This study investigates the Boulogne-sur-Mer fish market, which operates through a dual mechanism: auctions and bilateral transactions....
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| Main Authors: | , |
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| Format: | Article |
| Language: | English |
| Published: |
SpringerOpen
2025-07-01
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| Series: | Applied Network Science |
| Subjects: | |
| Online Access: | https://doi.org/10.1007/s41109-025-00714-x |
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| Summary: | Abstract In markets devoid of explicit quality signals and characterized by resource scarcity, understanding loyalty determinants is crucial for market efficiency. This study investigates the Boulogne-sur-Mer fish market, which operates through a dual mechanism: auctions and bilateral transactions. The research explores how social dynamics, trust, and loyalty influence market outcomes and efficiency. Using a comprehensive dataset of daily transactions from 2006 to 2007, we analyze traders’ behaviors and pairing strategies within these sub-markets. Our findings highlight the role of trust and loyalty in shaping market dynamics, particularly in the bilateral market, where personalized relationships and specific goods trade are prevalent. We define a specific loyalty index and verify its influence on the formation of transaction prices. We then employ a valued Exponential Random Graph Model (ERGM) to identify loyalty determinants, revealing distinct patterns between the auction and bilateral markets. The study concludes that while auctions facilitate efficient exchanges of large quantities, bilateral mechanisms foster trust-based relationships essential for securing specific goods, thus ensuring a stable coexistence of both trading mechanisms. |
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| ISSN: | 2364-8228 |