Property rights matter for trade—but only when they're at risk from politicians.📏 In Nigeria's bustling informal markets, traders band together to protect themselves against unstable conditions.
This paper argues that market associations form and enforce rules not because government is absent, but in response to active interference by officials perceived as predatory.🧡
Survey data from 1179 Lagos traders across 199 markets reveals this dynamic. Associations balance the power of predation against their members—threatening politicians when necessary—and avoid extortion by threatening each other. This ability hinges on whether traders compete with one another or not.
Key Findings️
- Market associations enforce pro-trade policies in response to predatory government interference ✅
- They balance power using credible threats against politicians ❌ extortion only if they can't extort via other means 😧
- Non-competing traders make it easier for associations to retaliate without fear of backlash 👯♂️
Real-World Relevance❑
This shows how economic survival in unstable political environments can drive institutional adaptation, even outside formal governance structures.🚫
