Telecommunications and an optimal contract in the rice trade : the background to the decline of inland brokers and rise of grain merchants in prewar Korea

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  • 近代電気通信と米穀取引における最適契約問題 : 朝鮮開港場における客主業消滅と米穀商成長の背景
  • キンダイ デンキ ツウシン ト ベイコク トリヒキ ニ オケル サイテキ ケイヤク モンダイ チョウセン カイコウジョウ ニ オケル キャクシュギョウ ショウメツ ト ベイコクショウ セイチョウ ノ ハイケイ

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When rice export began in great quantities from the 1890s, the profits from inland distribution and foreign trade of Korean rice were divided between inland brokers (gyak-ju) and grain merchants in the ports towns. One of the reasons why inland brokers were prosperous in the 1890s was the particular contract structure between inland brokers and grain merchants. An optimal contract allowed inland brokers a big margin, resulting from information asymmetry, such as inadequate monitoring of inland brokers on the part of grain merchants. However, the appearance of telecommunications changed the contract structure, resulting in the decline of inland brokers. Grain merchants prospered through the use of telecommunications for the rice trade. First of all, telecommunications allowed grain merchants to use the Rice Exchange to heir advantage. Additionally, as trade based on telecommunications was established among grain merchants, the role of agents in the rice trade drastically declined. However, not all agents, including inland brokers, disappeared from the grain market. They were able to find new business opportunities in decreasing new transaction costs derived from increased anonymous trade.

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