Economists also study the role of voluntary contributions to the public good
( Sugden 1984) and non-market reciprocal exchange ( Kranton 1996) in raising
economic welfare. Sugden explains a principle of reciprocity by which agents pursue
their self-interest through the provision of non-excludable public goods by making
unrequited contributions at least as large as others do. Kranton explains that agents
engage in reciprocal non-market relationships to economize on search or transaction
costs and to avoid opportunistic behaviour among strangers. Kranton also shows that
the utility for reciprocal non-market exchange is higher the smaller the market, and
that personalized exchange is more likely when people expect to interact frequently.
These claims, however, are purely theoretical. Here, an attempt is made to empirically
test these theories about the importance of reciprocated non-market relationships
between rms and the communities in which the owners reside and do business.