Chapter

Communities

in Economics

Published in print February 2007 | ISBN: 9780192853455
Published online September 2013 | e-ISBN: 9780191776328 | DOI: https://dx.doi.org/10.1093/actrade/9780192853455.003.0004

Series: Very Short Introductions

Communities

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‘Communities’ examines the cooperative relationships that exist in different communities. One way of preventing opportunistic behaviour is through linking relationships together. This requires more coordination, but reduces the chance of individuals breaking promises. Individuals exist as part of a network of communication, which ties them to other individuals. These ties can be strong, such as those between family, friends, or in close-knit communities, or weak, such as those from professional or civic circles. As weak ties provide greater personal freedom, why do we still hold strong ties? The answer lies in the high cost of making new relationships versus the relatively low cost of maintaining well-established ones.

Keywords: adverse selection; competitive equilibrium; competitiveness; discount; good; income; investment; moral hazard; rates; strategy; working capital

Chapter.  2405 words.  Illustrated.

Subjects: Economics

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