Markets as Mechanisms: Using a Role Structure

The producer side of markets has been viewed as either a decision arena or a stable structure of distinct roles. Harrison White has, however, proposed a model of markets where decision and structure depend on each other for their content and form. I show how White's model creates an image of markets as mechanisms—built from distinctive role behavior and giving guidance to the production decisions that underlie distinct roles. I offer a user's guide to the mechanism, and illustrate its payoffs. Finally, I argue that transcending the dualism between decision and structural approaches involves producing a theory that is both normative and positive in its claims, and ex post and ex ante in its orientation. Such theory is needed for contexts where both decisions and stable structures can be found.