Long-distance trade undermines honest behavior among strangers without institutions.

Evidence

For example, merchants engaged in long-distance trade could not be expected to know, of their own knowledge, whether another pair of merchants had honored their mutual obligations. Unless social and economic institutions developed to fill in the knowledge gap or unless other means of enforcement were established, honest behavior in a community of self-interested traders could not be maintained. — PAUL R. MILGRO, PAUL R. MILGRO - THE ROLE OF…, 66

Categorization

• XREF: Echoes the information problem underlying reputational enforcement in anonymous markets, connecting to the reader’s framework on private enforcement substituting for state legitimacy. — connects to: Network-based markets suffer free-riding when outsiders exploit customs without bearing membership costs. — Lisa Bernestein, Opting out of the Legal System, 208; Word-of-mouth reputation alone cannot sustain honest trade. — PAUL R. MILGRO, PAUL R. MILGRO - THE ROLE OF…, 38; Long-distance trade needs institutions to fill knowledge gaps about others’ honesty (+3 more)

Broader Connections

• Long-distance trade needs institutions to fill knowledge gaps about others’ honesty #expands (0.95)
• Sustained long-distance trade requires that reneging on agreements be unprofitable. #expands (0.85) — PAUL R. MILGRO, PAUL R. MILGRO - THE ROLE OF…, 167
• Some enforcement costs are unavoidable for sustaining honest exchange. #expands (0.80) — PAUL R. MILGRO, PAUL R. MILGRO - THE ROLE OF…, 137
• Kinship-based trust fails when its sanctioning institutions do not migrate #qualifies (0.80)