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Free keywords:
economic sociology, economic thought, financial markets, liberalization,
performativity
Abstract:
Market designers work as social engineers. They create institutional structures to enforce the assumptions of theoretical market mechanisms. Despite much work on performative effects of economics, sociology has not analyzed the feasibility of designers’ theoretical blueprints. This article suggests that this may be done by identifying assumptions that derail the mechanism if they are not enforced. Sociologists then need to trace obstacles to their realization in practices of implementation. Blueprints are infeasible if the assumptions cannot be enforced either by themselves or jointly. To illustrate the approach, the article identifies one such assumption and traces its impact on a historical experiment of market design: the creation of markets for transmission capacity in California’s electricity markets. To realize the design’s explicit assumptions, designers built institutions that violated an implicit uniformity assumption and created opportunities for manipulations. Since the design’s assumptions could not be realized simultaneously, it was infeasible.
