On the Viability of Gift Exchange in a Market Environment

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Is gift-exchange inevitably to be crowded out by impersonal market exchange? The presence of a thick-market externality indicates that this is indeed likely to be the case. But reciprocity or gift-exchange induces social relations. The utility function is extended in order to take account of social relations in the form of symbolic utility or moral sentiments. As long as moral sentiments are valued high enough it is shown that both market and gift-exchange can coexist. The spontaneous order need not necessarily select the most efficient market size however.
Original languageEnglish
Place of PublicationTilburg
Number of pages28
Publication statusPublished - 1999

Publication series

NameCentER Discussion Paper


  • exchange
  • reciprocity
  • gifts
  • moral and extended preferences


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