The “Public Secret” of Countering Transaction Risks

Case Study of Jewelry Merchants in Kathmandu’s Tourist Market

Abstract

In Themel, the tourist market of Kathmandu, Nepal, retailers who work in jewelry shops for tourists suspect that wholesalers, who are their transactional partners, are cheating them; this is also known as ḍabbe-bāz. Retailers, who are cautious of ḍabbe-bāz, request wholesalers to search for information on commodities they have bought. That information is normally sought in unpaid term. Through that process, the retailers build trust with the wholesalers and become their regular customers. Being a “regular” means that a retailer does not have to search for information, and that he respects the wholesaler. However, retailers sustain a regular relationship, but also search for information among regulars. Thus, my thesis explains how retailers are often regulars but still search for information.

Many researchers have discussed how buyers deal with the risk of cheating with the uncertainties of quality and price. These discussions have been divided into two types, with the risk of market uncertainty solved by two things:(1)noneconomic social ties and(2)sharing information through searches and converting buyers into clientele. However, it is clarified that personalized transactional relationships become risky in themselves if those ties get increasingly stronger. Meanwhile, Alexander and Alexander specifically discuss how traders in the Java market deal with such a risk by avoiding it. Initially, in the Java market, it is difficult to obtain appropriate information about the range of the current prices of particular goods. In such a situation, buyers and sellers trade appropriate information by becoming trading partners with each other. However, that risks the restriction of the ow of new information about prices and the quality of goods, so even if retail clothing dealers can obtain the same goods at the same prices from their trading partners, they purposely buy goods from producers’ agents who are visiting the market so as to obtain new information about the prices of volatile goods. The retailers deal in that way with the restrictions on information stemming from trading partnerships.

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