Provision of Collective Behavior in Market Settings: A Study of Closed-Auction Markets for Antiques and Secondhand Goods in Japan

Abstract

This study explores how market order emerges in the closed auction markets for antiques and secondhand goods in Japan. Most auction markets for antiques and secondhand goods are exclusive to dealers in Japan. The Antique Business Act (Kobutsu Eigyo Ho) states that participants in auction markets must have a secondhand goods dealer license. Participants must obtain the permission of market managers to enter the markets as well. Dealers often belong to several auction markets and associate with other members. Informal norms and conventions, and reciprocal and hierarchical relationships develop through repetitive interactions among participants in the auctions, which can bring order in the markets. Norms and conventions help market participants anticipate other members’ behavior. However, norms and conventions alone are not sufficient to generate market order; enforcement mechanisms are necessary. A hierarchy is a typical enforcement mechanism. High status participants can exert their influence to sanction violators in the markets. Also, reciprocal relationships can prevent violation of norms and conventions, and facilitate cooperative and give-and-take behavior. On the other hand, reciprocal and hierarchical relationships will distort fair and competitive auctioneering. The cultural script of market competition is sometimes utilized for preventing the malfunction. This interplaying multiple devices of market, reciprocity, and hierarchy as well as norms and conventions altogether contribute to realizing order in the closed auctions.