In contrast to the 'ideal-type' markets used in economic literature, 'real markets' are very diverse and complicated, having widely different formal and informal institutions, and economic context, particularly in developing countries like Bangladesh. This briefing analyses real markets in Bangladesh and argues that, in an underdeveloped and unequal society, market interactions reproduce and deepen the already existing inequalities through the interactions of various formal and informal institutions. Using the example of paddy-markets in rural Bangladesh, this paper explains how the existence of vertical integration, 'patronclient' types of relationship between market players and the interlocking of different markets, results in greater benefits for those relatively powerful and rich among the market players, through the use of greater bargaining advantage. Also identifying a few institutional gaps, this paper emphasizes a number of policy measures that can contribute towards correcting the real markets in favour of the poor.
IPPG Briefing Paper No. Eight, In Conjunction with CUTS International, DFID, London, UK, 7 pp.