Information, trust, and market quality(Information, trust, and market quality,PANEL DISCUSSIONS: 78th annual conference)

Abstract

This article examines quality problems encountered in goods markets in East Asia from the end of the 19th to the beginning of the 20th century. It investigates how mechanisms were formed to reduce asymmetries of information regarding product quality and enable stable transactions at appropriate prices for high-quality merchandise. Research to date has focused almost exclusively on the effectiveness of centralized solutions by governments, trade associations (dogyo kumiai), and other intermediate organizations to alleviate asymmetries of information. It has not fully studied decentralized approaches by transactors. This panel highlights the important role played by parties to a transaction to increase trust in transactions as a means of solving quality problems in circumstances when it is difficult to establish centralized solutions over a short period of time, for example solutions that cover the entire breadth of a rapidly developing market. Even in cases in which there are limits to what can be accomplished by centralized approaches, effective solutions to quality problems can be found by parties to a transaction through a combination of the creation of new transactional systems, enhanced disclosure of quality information, and technical and financial support to supplement them.