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Soc. Sci. 2018, 7(11), 238; https://doi.org/10.3390/socsci7110238

Indonesian Traditional Market Flexibility Amidst State Promoted Market Competition

1
Department of Socio-Economics, Faculty of Agriculture, Brawijaya University, Jln. Veteran, Malang 65145, Indonesia
2
Department of Human Geography, University of Göttingen, 37077 Göttingen, Germany
*
Author to whom correspondence should be addressed.
Received: 17 October 2018 / Revised: 11 November 2018 / Accepted: 12 November 2018 / Published: 15 November 2018
(This article belongs to the Section Social Economics)
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Abstract

The penetration of modern supermarkets is believed to be the cause of the declining role of traditional markets and street vendors in Indonesia. Nevertheless, the competition between state-promoted markets and traditional markets is rarely discussed, both adaptation of market institution and strategy of market actors. This research outlined a theoretical understanding of the dynamics of traditional markets, along the concepts of market flexibility as an adaptation strategy and coordination problems as market actor strategies. The researchers empirically reflect the strategies of four traditional vegetable markets that still survive from tight competition—both the market itself as a social institution, and the strategies of actors involved in market transactions. The traditional market builds flexibility by: (1) Specifying commodities, (2) segmenting customers, (3) changing market operating hour, (4) modifying transportation to operate more efficiently, and (5) low cost market management. At the actor level, competition problems are resolved by utilizing an emotional sentiment of friendship social relations; the formation of prices is determined by developing effective networks of information; and the cooperation problem is dealt with by building a system of punishment and reward based on informal mechanisms. This finding verifies the thesis stating that market competitiveness is determined by institutional flexibility against competition and the ability of market actors to build effective social interactions to maintain market sustainability. Based on the above explanation, further research needs to be focused on calculating how much efficiency is built due to market flexibility, both the transaction cost and the production cost in a quantitative manner. At the actor level, it is necessary to delineate the strategies being built, whether based on pure rational or economic and moral or non-economic considerations in solving coordination problems in the market. View Full-Text
Keywords: traditional market; state promoted market; market flexibility; market actors; competition; valuation; coordination traditional market; state promoted market; market flexibility; market actors; competition; valuation; coordination
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This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited (CC BY 4.0).
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Purnomo, M.; Otten, F.; Faust, H. Indonesian Traditional Market Flexibility Amidst State Promoted Market Competition. Soc. Sci. 2018, 7, 238.

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