Intrabourse reputation monitoring, induced by competition between bourses, is likely to be cheaper than increased monitoring by an umbrella organization such as the world federation. Within each bourse, there is a measure of social and ethnic homogeneity. Consequently, intrabourse monitoring can take advantage of preexisting social relationships and therefore be achieved at a lower cost than regulation by an outside body that cannot take advantage of these preexisting relationships.

XREF: Connects to economic sociology work on reputation and social capital, and to governance-by-community literature versus formal external regulation.

Lisa Bernestein, Opting out of the Legal Sys…, loc. 207