Reinventing the Bazaar: The Natural History of Markets

From eBay to the stock market to the unexpected twists of the world's post-communist economies, market structure has suddenly become quite visible. We have occasion to wonder, "What makes markets work? How important are they? What can we do to improve them? And can we harness them to other applications?"

In something akin to a nature walk, John McMillan takes us on a guided tour, pointing out features of the landscape we often do not notice. With examples ranging from a camel trading fair in India to the $20 million per day Aalsmeer flower market to the global trade in AIDS drugs, McMillan shows us markets in all their varieties ? the small and the large, the simple and the overwhelmingly complex, the successful and the unsuccessful. Further, he brings them together to show how these markets combine to form the global economy.

Markets provoke clashing opinions. Critics denounce them as the source of exploitation and poverty. Extreme proponents extol them as the font of liberty and prosperity. Eschewing ideology, McMillan spells out why markets are neither magical nor immoral, but rather imperfect yet vitally important tools. They can fail, and often do, but they represent the best way we've discovered thus far for improving our living standards.

From the wild swings of the stock market to the online auctions of eBay, markets have suddenly become quite visible. This text questions what makes institutions work, how important they are and demonstrates that markets are powerful if imperfect tools, used for improving our living standards.

John McMillan is the Jonathan B. Lovelace Professor of Economics at Stanford University's Graduate School of Business.