Trust and Search in Vietnam's Emerging Private Sector

Posted: 24 Oct 1999

See all articles by Stephan M. Haggard

Stephan M. Haggard

University of California, San Diego (UCSD) - Graduate School of International Relations and Pacific Studies (IRPS)

John McMillan

CESifo (Center for Economic Studies and Ifo Institute)

Christopher M. Woodruff

University of California, San Diego (UCSD) - Graduate School of International Relations and Pacific Studies (IRPS)

Date Written: November 1996

Abstract

This paper investigates how start-up firms in Vietnam operate in the face of two significant market frictions: a poorly developed legal system and inadequate market information. We argue that these two market frictions actually offset each other. Poor market information and the consequent difficulty of locating trading partners can help make self-enforcing contracts workable. Firms that have nowhere else to go will refrain from breaking their agreements. If it is difficult to locate alternative trading partners, firms will invest in maintaining their existing relationships. Our empirical analysis is consistent with this hypothesis.

JEL Classification: O12, O17, P21

Suggested Citation

Haggard, Stephan M. and McMillan, John and Woodruff, Christopher, Trust and Search in Vietnam's Emerging Private Sector (November 1996). Available at SSRN: https://ssrn.com/abstract=5194

Stephan M. Haggard (Contact Author)

University of California, San Diego (UCSD) - Graduate School of International Relations and Pacific Studies (IRPS) ( email )

9500 Gilman Drive
La Jolla, CA 92093-0519
United States
858-534-5781 (Phone)
858-534-3939 (Fax)

John McMillan

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Christopher Woodruff

University of California, San Diego (UCSD) - Graduate School of International Relations and Pacific Studies (IRPS) ( email )

9500 Gilman Drive
La Jolla, CA 92093-0519
United States
858-534-0590 (Phone)
858-534-3939 (Fax)

Register to save articles to
your library

Register

Paper statistics

Abstract Views
833
PlumX Metrics