Competition in the Informal Sector of the Economy:

the Case of Market Traders in Turkey

Recep Varcin

Ankara University

Published in the

International Journal of Sociology and Social Policy

Vol 21, #3/4, 2000.

(Special Edition edited by John C. Cross and Steve Balkin)

(This version is copyrighted by the author and is made available for general reference only. It is not necessarily a complete version. Footnotes and graphs or tables may not translate properly into the web format. For the full text, or to make formal citations, you must use the published version from the journal. Please ask your local library to request this issue of the IJSSP for your use.)

Introduction

The purpose of this article is to explore to what extent informals are exposed to competition as well as how they struggle to survive under such condition. I put this issue under close scrutiny by focusing on one of the most visible informal economic activities: market trading in Ankara, Turkey. Since the reality of the informal sector was first realized (Hart 1973), there has been a growing body of literature focusing on its different aspects. Although prior research conducted in the informal sector demonstrated that informal occupations are extremely competitive and individualistic, the issue of conflicts and competition has received little attention in the informal sector literature (Bromley and Birkbeck 1984).

In examining competition in the informal sector, there is the issue of whether conventional economic parameters apply to the economic activity of market traders. Bromley and Birkbeck (1984, p. 186) brilliantly pointed out that there are certain ways in which patterns of conflict are different from, and in some ways more complex than, conventionally studied conflict in the formal sector. Following their approach, I generated the following questions: Are all of these traders profit-maximizing sellers acting in accordance with the principles of a competitive economy? Does competition vary according to the scale of enterprise? What are the economic, cultural and social factors that affect and constrain economic decision-making in curbing competition? To what extent does the intensive competition among market traders lead to cleavage? Do market traders form informal non-class based associations to curb competition with each other? And finally, what social, ethnic, and religious factors play a role in the formation of these associations? In addressing these questions, there is the need for a conceptual framework to adequately examine the competition among market traders.

This article consists of the five sections. The first section develops a conceptual framework within which the above questions will be examined. The second section introduces the research setting and outlines specific research methods being used in collecting data. This section will not only provide a general description of the setting but will also contain background information necessary for understanding my analysis in later sections. The third section explains strategies and goals of market traders in marketing and curbing competition. The fourth section discusses the significance of ethnicity and localism playing important role in group formation and curbing competition. The final section discusses the strategies that the market traders developed to curb competition. This article concludes with a summary of the major findings.

Conceptual Framework

Many studies point out that informal occupations are extremely competitive and individualistic. In the marketing branch of the informal sector, people work in close proximity to others selling similar products. One’s success in business may depend on, or lead to, another’s failure. However, even though this informal occupation is very competitive and an important source of conflict, we should not take for granted that every individual market trader engages in competition and makes decisions in accordance with what mainstream economic models suggest. Therefore, it is necessary to first understand the ways in which these market traders make decisions in selling their produce in a competitive environment. A conceptual framework should include the ways in which market traders make economic decisions and the ways in which they attempt to curb competition.

Mainstream economic models do not fit the situation of market traders in a number of ways. First of all, an enterprise in the informal sector is smaller in scale compared to an enterprise in the formal sector. It may be problematic to apply an economic model of competition, used to examine the economic behavior of large formal firms to much smaller operations . Second, economists use a particular model, the supply and demand curve, as the determinant of prices. It may also be problematic to presume that the assumptions upon which the supply and demand curve are based are universal and can be applied to the informal sector. For instance, a market trader may consider the maintenance of a stable set of buyers and long term relationships with other traders in setting prices. Furthermore, there can be institutionalized price setting mechanisms forced by local authorities. Third, it can also be problematic to presume that all market traders are acting only to maximize profit. There may be a variety of reasons to engage in market trading and, thus, there may be a variety of decision-making processes involved in the selling of goods.

Therefore, a conceptual framework that neglects the complexity of the indigenous market will inevitably lead to research findings that market traders act in a non-rational manner when selling their produce. Sociological and anthropological studies have raised serious questions about applying standard economic theory to this kind of marketing. Beals (1975, p. 3) points out that:

Beals, in his study of the Oaxaca market system in Mexico, notes that since it is necessary to maintain social relations with competitors over long periods of time, competition is moderated. He notes (1975, p. 264) that "both [profit] maximization and competition ... are influenced by long-range market considerations and by the restraints of continuing social relationships." Therefore, it is essential to examine the goals of market traders in selling foodstuffs and also to examine the impact of cultural and social values on market behavior. We need to examine the principles that are used in decision-making by market traders and to then address how these principles and competition work out qualitatively. Even if some market traders tend to operate in a less competitive area, there may be a large number of market traders who operate on the basis of competition in order to create more chance for success. In handling competition, economic factors, along with ethical and social factors, may play an important role. In this regard, a Weberian concept of closure is very relevant.

Weber (1978, p. 342) defines social closure as a process by which a collectivity of people attempt to maximize rewards and opportunities by limiting access to rewards and opportunities only to their own group. He argues (1978, pp. 341-342):

Weber also points out a tendency toward the monopolization of opportunities. Economic opportunities are usually the driving motive behind the monopolization. He furthermore argues (1978, p. 342) that "this monopolization is directed against competitors who share some positive and negative characteristics; its purpose is always the closure of social and economic opportunities to outsiders." The extent of this monopolization is variable, depending on the extent to which the group member benefits from monopolistic advantages. Weber also argues that monopolistic social and economic opportunities may also be "closed" to insiders. In other words, he notes that there can be differentiation within the group itself. Some members of the group either exclude the other members or differentially distribute economic and social resources among members. Weber calls this kind of closure monopolistic tendency. Weber also mentions another tendency, the expansionist tendency, in pursuing the economic and social interests of the group. According to Weber, "individuals live by representing group interests or, in some other manner, ideologically or economically from the existence of a group" (1978, p. 345). He furthermore argues that if such interest representation pays in other respects, a group can found an association which maintains the continuation of concerted action under all circumstances. That is, the group starts expanding its influence not only in one particular area but also in other areas, making the influence of the association stronger and therefore controlling more and more of the economic and social resources available to its members. Weber’s concept of closure has received considerable attention among some sociologists. Parkin, as a neo-Weberian, extends the concept of closure, and demonstrates its linkage to other Weberian concepts, such as power and status groups, and social classes.

According to Parkin, there are two modes of closure: exclusion and solidarism (1974, pp. 6-12). Exclusionary closure is the closure of social and economic opportunities to outsiders whereas solidaristic closure is a closure attempt by excluded groups. Closure relations, according to Parkin, are in fact power relations. He relates the concept of closure to social classes: "Exclusionary social closure is an aspect of conflicts and cleavage within social classes as well as between them" (1979, p. 89). Parkin argues that the strategy of social closures creates subordinate social formations, which are, by definition, exploitative. He points out (1979, p. 46):

Furthermore, he argues that exclusionary social closure necessarily entails the creation of a group, class or stratum. While individualist exclusion leads to segmental status groups and social classes, collectivist exclusion leads to communal groups and social classes (Parkin, 1979, p. 68).

The concept of social closure is of great importance in terms of examining five related issues in my study: (a) how and in what ways the competitive nature of the marketing business leads to conflicts among market traders and what patterns they exhibit; (b) what kinds of externally identifiable characteristics of traders play a significant role in curbing this competition; (c) to what extent these characteristics lead to the formation of formal or informal non-class based associations; (d) whether these social closure groups cut across social class categories; and (e) to what extent "excluded" groups form or attempt solidaristic closure.

The Research Setting and Data

The Research Setting

In Ankara, market traders provide urban dwellers with fresh vegetables, fruits and other kinds of food in marketplaces that are located in public fields or on public streets. Marketplaces in Ankara are periodic outlets for fresh vegetables, fruits and dairy products. Most of the market traders are professional sellers, meaning that marketing is their primary business. The market traders in Ankara obtain their supplies either directly from rural producers or from city wholesale commissioners (called hal). Those who buy directly from rural producers do this without abandoning their participation in the market by employing somebody in the agricultural site to buy and ship the supplies to the marketplace. Those who obtain their supplies from the city hal, visit the city hal in the early morning and ship their supplies to the marketplace on the same day.

These marketplaces are not traditional rural or town markets. The traditional rural marketplace is a periodic market convening in a designated place at a set time (Forman and Riegelhaupt 1970). In rural periodic marketing system, marketplaces are made up largely of local rural people who are simultaneously consumers and suppliers (Jones 1972; Smith 1974). In rural markets, market traders are not itinerants because they supply a single center. They attend one market weekly and farm and engage in craft activities during the remainder of the week. In many of these traditional marketplaces traders are usually women, bringing their crops to the market center (Epstein 1982). Unlike these traditional markets including some traditional market elsewhere in Turkey, the market trading in Ankara has been dominated exclusively by males. Market traders in Ankara also differ from itinerant sellers who periodically travel from one town market to another and supply industrial goods to local people (Smith 1974). Marketplaces in Ankara are considered as municipal markets, controlled by local municipalities.

Ankara is a metropolitan city, with a total population of about three million people. There is a metropolitan municipality responsible for some aspects of metropolitan Ankara as a whole such as public transportation, sewage and water, and metropolitan planning. This metropolitan area is further fragmented into eight suburban municipalities. Each suburban municipality bears the responsibility for all marketplaces taking place within its boundary. In each suburban area the local municipality provides the market traders with various marketplace facilities. The municipality controls these places and takes the upper hand in indicating which parts of the city are to be used as marketplaces. The municipality has a responsibility to set up new marketplaces. There are 73 marketplaces in the metropolitan city of Ankara which convene once or twice a week depending on the size of neighborhood. Setting up and reorganization of marketplaces depends on the demand and political pressure that comes from the inhabitants and political representatives of a residential area as well as from market traders. The municipality appoints a group of uniformed civil servants (called "zabita" a kind of municipal law enforcement agency) to each marketplace. There is a zabita office in almost every marketplace. The zabita usually visit every stall several times a day to check whether the marketing business is going smoothly. The zabita also collect fees from the market traders for the various municipal services. In return, the municipality is responsible for the maintenance of the marketplace. The zabita are also responsible for making spatial arrangements so as to provide an easy flow of goods and people within the marketplace.

The market traders are represented by their voluntary association, the Chamber of Marketplace Traders, CMT (Ankara Pazar Yerleri Esnafi Odasi). It was founded in 1962 by the traders themselves in order to pursue the economic and social interests of market traders. The CMT currently has 5730 members, all active traders. The president and administrative personnel of this organization are elected for a three-year period by the members. It conducts CMT business with various government institutions and the municipality on behalf of its members. The organization increases the power and influence of the members vis-à-vis such bodies. The distribution of the stalls and spatial location of the traders in marketplaces was the domain of the CMT in the past. Although it still plays an active role in these matters, they constitute an area of conflict between the CMT and the municipality.

The value of a stall varies in accordance with its spatial location in the marketplace. Thus, to prevent conflict, spatial location within a marketplace is sometimes determined by a complicated lottery among eligible candidates. Almost all marketplaces have several major entries and the value of a stall increases as one comes towards the center. The market traders themselves call the less valuable ones "secondary stalls" while they call the ones at the center "block." The latter attracts more customers than the former. The point of location in the marketplace does affect profitability and has a direct bearing on the growth potential of the firms.

Finally, in introducing the setting, it is relevant to comment on the periodicity of the marketplaces. The markets are held at regular intervals at an appointed location. Of the 73 marketplaces, only three marketplaces meet two times a week. The rest of the marketplaces meet once a week. This pattern seems designed to facilitate the activities of market traders. The distribution area of a marketplace consists of those people who are willing to visit that marketplace on the scheduled market day. In a given marketplace, market traders increase their trade volume by meeting once a week. By meeting once a week in a given marketplace, market traders sell high volume at low cost, because they encourage consumers to buy in bulk for their entire week’s needs. The meeting schedule of marketplaces is also designed to facilitate the activities of market traders. The marketplace schedule is organized in terms of time and space. Everyday about seven marketplaces are held in different parts of the city. In marketplace scheduling proximity in space implies separation in time. That is to say, the marketplaces of two residential areas that are close to each other meet on different days of the week: usually an adjacent day plus one or two days.

For this study I chose six marketplaces meeting on different days of the week. Consistent with my theoretical framework and suitable for exploring the research questions, I considered the following criteria in choosing marketplaces: (a) the income level of the neighborhoods (lower-middle income, middle-income, and another in a newly developed suburban area); (b) the physical structure of the marketplace (two are very-well developed with asphalted ground, roofs, and utilities provided, and the other four have none of these); and (c) spatial location of the marketplace (marketplaces, meeting in different sub-urban municipal zones). The basic idea behind applying these criteria was that all of these may make a difference in terms of daily operation of market traders and their relationships with different local municipalities. I collected much of my data between early September and late December 1994.

Data

The issue of methodology has generated one of the main debates in informal sector studies. It has been one of the main themes of international conferences on the informal sector. Noted academics (e.g., Portes, et al 1989; Schmitz 1982; Moser 1984; Bromley and Birkbeck 1984) have also addressed the importance of selecting an appropriate methodology. Noted methodological problems lie in the usage of cross-section study and questionnaire that impose limitations on the interpretation of data. In this study, I used Bromley and Birkbeck’s (1984) approach to researching street occupations.

Accordingly, I used a combination of research methods to generate data. Some aspects of competition could be addressed using data collected with semi-structured, in-depth interviews with officials, leaders of enterprises, while other aspects required data to be collected through participant observation, still others were best explored through documentary research. Before collecting data, I built up a network of contacts to obtain preliminary information about market trading and also learned rivalries happening in the market. During and after this process I developed strategies for collecting data and framed appropriate questions to be asked of the informants. It is beyond the scope of this article to explain every detail of research methods utilized in this study. It might, however, be necessary to give some information on the set of questions that I used, among others, in semi-structured in-depth interviews.

I used two sets of questions. The first set sought information on the following matters: (a) whether the market traders engage in competition with each other; (b) what actions they took regarding competition; and (c) how they set prices and why they changed them. The second set concerned market traders’ engagement in curbing competition. This subset of questions centered on the following: (a) religious, ethnic, and local background; (b) business mergers; (c) the religious, ethnic, and local background of those with whom they closely associate in terms of economic and non-economic matters; (d) with what informal group did they associate and with what group were they to ally for CMT election; and (f) any rivalry with other market traders and the basis of it. Further questions were directed to precisely register competition among market traders. After 60 interviews with a diverse set of market traders, what Glaser and Strauss (1967) call "saturation" was experienced. After that point, I discontinued interviewing.

Strategies of Market Traders

In understanding the competitive nature of market trading, it is imperative to explore whether market traders engage in competition for economic reasons or whether social and cultural factors are prominent. Many previous studies (e.g., Hasselmann 1975; Boyd et al 1961) fail to consider the fact that informal market traders are quite different than those observed in formal markets in terms of what motivates competition among them and of how they cope with competition. Indeed, there are several studies indicating that marketing decisions are not necessarily made in accordance with simple profit maximization (e.g., Davis 1973; Epstein 1982). I found that it is misleading to view all market traders as a homogeneous group of people who act solely to maximize profit as they engage in competition. Instead, my research reveals that there are a variety of decision-making processes in which market traders engage when selling their produce. I identified three groups of market traders in terms of goals and strategies they developed to sell their produce. I labeled these groups profit maximizers, risk minimizers, and marginal traders.

Profit Maximizers

Profit maximizers are mainly the group of traders that can be described as small capitalists. This group of market traders act "rationally" in terms of maximizing profits. These traders had been in the marketing business for a long period of time and had an extensive network of employees and marketing networks. Their goal was to increase their profit margin by all available means. For this purpose, they developed three related strategies: changing the mode of access to produce, attracting more customers to the marketplace, and selling high volume at a competitive price.

Traditionally and legally, agricultural produce in Turkey has been distributed through the commissioner hals. There is a nation-wide network of commissioners through which agricultural produce is distributed to retail outlets. Farmers sell their produces to the local hal in their town. The local hal agent transfers this produce to other hals in different parts of the country. The retailers visit the local hal and obtain their supplies. In this system of distribution the state and local municipalities impose taxes and fees. In each entrance to the hal, officers check incoming trucks for appropriate invoices. When retailers check out their produce, they have to show these officers the invoice for each item they bought. In this strict system of control, the purpose of the central state or the municipality is not only to collect revenues but also to regulate produce prices in the market. Based on the hal prices, local municipalities daily set the retail price ceiling for all produce. Until recently, in every city the municipal officials, zabita, checked the retail produce outlets to see if the retail sellers obeyed the regulation. Retailers had to show the invoice indicating the buying price of the produce. Then, the zabita permitted a 30 percent profit margin. Retailers were subjected to a monetary fine if they failed to show the invoice or if their tag price exceeded the maximum 30 percent profit margin.

In this system of distribution each commissioner receives a commission. When commissions and taxes are added up, there emerges a significant price difference between the original price and the final cost to the customer. Because of this, some market traders have challenged this traditional system of distribution, the control of the state and local municipalities over the distribution of foodstuffs and the application of state and local taxes. By eliminating taxes and intermediaries and buying directly from producers, these profit maximizers have gained a competitive edge. Their strategy has resulted in a significant increase in the threshold population of buyers. That is, it has attracted more and more city dwellers to the marketplace because prices are now lower than the supermarket. They have lowered the cost of living in the city and made the periodic marketplace the main distribution center of fresh fruits and vegetables.

Some of these traders even buy produce in the field before it is harvested. The market traders themselves hire laborers at the production site and get their produce harvested and shipped to the market with the company truck. Whether buying harvested or unharvested produce, profit maximizers buy in large quantities, since this reduces the cost of transportation per unit. Since these traders buy in large quantities, they try to maximize profit through lower prices and higher volume. Anybody who is familiar with periodic markets knows that some market traders encourage the buyer to buy a higher volume by offering a lower price. Thus, this group of market traders makes decisions in accordance with profit maximization, which requires restructuring of prices in accordance with changing supply and demand.

Risk Minimizers

Risk minimizers are either self-employed or lumpen capitalists. Since profit maximizers have changed the traditional mode of access to supply and can thus sell their produce at lower prices, the other market traders who obtain their supply from hal are not in a position to compete with these traders. If they sell similar produce at the market, they risk losing money and their working capital. In order to minimize this risk and to stand a chance of competitive success, they have developed three strategies. The first strategy is to stay outside the product domain of profit maximizers, while the second strategy is to focus on the social aspect of transactions, and the third is bargaining.

The first strategy for minimizing risk is to sell specific types of produce. My research findings show that this group of traders tends to sell those fruits and vegetables that are either out of season or low-demand produce, in order to avoid competition with profit maximizers. Using this strategy, risk minimizers target a different set of buyers, the relatively well-to-do who, for instance, pay higher prices for early vegetables and fruits. In some cases, they sell organic produce or better-quality produce. In the marketplaces that are located in middle-class neighborhoods these sellers have no difficulty targeting those buyers. In working-class neighborhoods, their sales decrease, but they still find some customers.

The second strategy these market traders have employed is to focus on the sales transaction itself, making the transaction a personal rather than an impersonal one. The hypothetical "perfectly competitive market" of classical economic theory is built on an assumption that atomized actors engage in impersonal transactions. This assumption is supported in the relationship between buyer and seller in a formally organized supermarket, where the transaction has no further meaning aside from exchange. In the informal marketplace, however, the risk minimizers attempt to establish long-term buyer-seller relationships. Although all sellers use this strategy in selling their produce to some degree, it is much more important for risk minimizers to use personal and social aspects in transactions efficiently and effectively.

In this strategy, the transaction proceeds via the manipulation of cultural norms and symbols. For instance, the trader welcomes the buyer by addressing him/her using kinship terms that mark respect or affection, such as "sister," "brother," "uncle," or "aunt." These terms are often stated in an exaggerated form. The trader, for example, will call a relatively old man or woman "father" or "mother." If a buyer does not have change to pay for her/his merchandise, the risk minimizer offers: "Do not worry, you can pay it after you complete your shopping or pay it next week." Taking this risk that the buyer may not show up again and he will not get his money, the trader demonstrates that he trusts his customer and in return expects to establish a long term buyer-seller relationship. Such gestures go a long way toward establishing a mutual trust between the buyer and trader, especially in an environment where there is much suspicion about the price and quality of the produce. Market traders do not usually allow the customers to choose their produce at will. However, in the case of an established buyer-seller relationship, traders allow customers to choose their produce. In establishing long-term buyer-seller relationships, the trader stabilizes his income without engaging in intensive competition by lowering prices.

A third strategy, which, although used by all traders, is especially prominent among risk minimizers, is bargaining. Bargaining is an effective mechanism for dealing with competition. When a customer asks the price of a given item, the trader first declares its tag price. When the customer looks skeptical or begins to leave, the trader tries to persuade him/her to buy the produce either by reducing the price or by demonstrating that his produce is of the best quality. In other words, risk-minimizers use bargaining as a way of staying competitive. The trader believes that if he declares his true selling price instead of its tag price, there would be little chance of making a sale. In this way, he gives the impression that he is doing a favor for that particular buyer. The act of exchange becomes the basis of the transaction. That is to say, exchanges between buyers and risk-minimizers are laden with social meaning. It should also be stressed that by bargaining with individual customers, the risk-minimizer attempts to maintain long term relationships with other traders who are socially and/or ethnically closer to him. Traders who are in the same circle of informal groups do not openly compete with each other. That is to say, informal one-to-one price setting is balanced against the need to maintain a long-term relationship not only with his customers but also with his fellow traders who belong to the same group.

Marginal Traders

In addition to profit maximizers and risk minimizers, there is another group of market traders. These are irregular self-employed traders who are either retired or low ranking state employees. They intend to make extra money to add to their family budget. They find a spot at the margin of the marketplace to sell a particular kind of produce, e.g., garlic, purslane, or parsley. Marketing is neither their primary occupation nor their main source of income. They are not affiliated with the CMT. Hasan is an example: "I attend the market once or twice a week to make additional money. Today, I have made some little amount of money, thank heaven! It is better than wasting my time at home." As is obvious from Hasan’s remarks, the goal of marginal traders is neither profit maximization nor risk minimization. Although the number of marginal traders is low and their existence in the market is negligible in relation to the overall operation of the market, there are several marginal market traders in each marketplace. Marketplaces are open to these marginal traders, even though they have little chance of success in market. Halil illustrates this point with his experience as a marginal trader:

As the forgoing analysis demonstrates, market traders in Ankara are not homogeneous in terms of their goals and strategies. Market trading in Ankara is a complex system where there are a variety of reasons for engaging in marketing and a variety of strategies for selling produce.

The Significance of Ethnicity and Localism among Market Traders

Recent decades have witnessed the declining significance of class-based politics and the increasing significance of ethnicity and other non-class-politics, such as kinship, nationality and localism, which have been observed for years in the daily lives of people in the cities of developing countries. Roberts (1982, p. 373), for example, reports on the significance of non-class-based factors in developing countries:

There have been additional studies that report similar results vis-a- vis the significance of kinship, ethnicity, religion and localism, which are effective for city dwellers coping with city life (e.g., Nelson 1979). My research showed that ethnicity played an important role in terms of finding employment in the marketplace and the exploitation of employees by employers. In this section, I will briefly explore the significance of ethnicity and localism as two important externally identifiable characteristics around which market traders mobilize their resources and restrict the access of opportunities to "eligibles."

Although there are many ethnic and religious groups in Turkey, such as Turks, Kurds, Araps, Laz, Crimean Tatars, Albanians, Boshnaks (Bosnian), Cherkez, Georgians, Gypsies or Alawies, Sunnies and Christians, I saw mainly Kurds and Turks working in the market. After the Kurdish Workers Party, PKK, launched a Kurdish liberation movement in 1984 against the Turkish state, there has been massive migration from the southeastern part of Turkey, where mainly Kurdish people live, to the western metropolitan regions. Ankara is one of these regions to which many Kurdish families have migrated and where some of them engage in marketing.

The influx of Kurdish people in market trading in Ankara created discomfort among Turkish market traders. There was concern among Turkish market traders that Kurdish market traders would one day dominate the market. The existence of such negative attitudes towards the Kurdish market traders, even if not manifested openly, further strengthens the cohesiveness of Kurdish market traders among themselves. They help each other in carrying stalls, support each other when a fight breaks out, and protect each other. This has an impact on the economic activity of Kurdish market traders in that it leads to a strengthening of their position in the market. Because of political pressures, Kurdish market traders do not openly manifest their identities in the market. The term Dogulu, or "Easterners" is used to refer to Kurdish sellers.

In Turkey, localism is an even more important identity marker than is ethnicity. In Anatolian culture, local origin plays a very important role in forming status groups. Local origin refers to administratively divided provinces. People identify themselves with the province in which they were born and in which their citizenship is registered. Even if a person were raised in another province, he or she still identifies himself/herself according to his/her natal province. Sharing the same local origin with a person makes it a lot easier for one to receive hospitality or a warm welcome, which she or he might otherwise not be possible to obtain. In the market, informally structured status groups are based on either ethnicity and/or local origin.

Many of the market traders who are currently owners of stalls or employees and self-employed entered the market with the help of their fellow locals. They also received help finding a house in the city. Domination of markets by people from certain provinces shows, in fact, that it is difficult, if not impossible, for one to engage in marketing without the help of the existing market traders. Localism gives people the sense of solidarity and security in the metropolitan city of Ankara. Cooperation and solidarity among traders along lines of local origins are obvious in the market. If there is a disagreement or dispute among two market traders, market traders immediately coalesce along group lines and support their fellow locals.

Coalescence along local lines is not limited to conflict situations. It also occurs in carrying stalls from one marketplace to another and loading and unloading stalls and foodstuffs. Cooperation among market traders from the same locality even goes beyond the work environment. They help each other find houses or plots for building a house. Market traders from the same locality also chat in their coffee houses (e.g., Yozgatlilar Kiraathanesi, coffee house attended by those who are from Yozgat) after the workhours, pay visits to each other, support each other during a wedding or their sons’ circumcision ceremonies, and help arrange marriages within the group. Each of these cases is an example of group cooperation. The significance of ethnicity and localism for market traders makes it easy for them to take an action to monopolize resources and to agglomerate their enterprises in order to gain a competitive edge in the market.

Agglomeration of Enterprises

Competitiveness in the market forces market traders to seek the economy of scale. Market traders realize that achieving an economy of scale helps them to stay competitive and to maximize profits. With this economic motivation, some market traders come together along ethnic or local lines to agglomerate their enterprises. The existence of large-scale enterprises in the market has led these traders to unite their enterprises in order to lower the average cost and consequently to increase their profit margin. Economy of scale is achieved by the agglomeration of two or more enterprises whose owners share the same ethnic or local identity. The specific ways in which this agglomeration operates vary. Often, however, a relatively old and experienced market trader who is self employed or lumpen capitalist takes the initiative to expand the scale of his operation. In the agglomeration of enterprises, market traders put together their working capital, establish a marketing network, increase their number of stalls, buy a truck, and change their mode of access to supplies.

Although there is an economic motive behind the agglomeration of enterprises, this motive does not come to the forefront at the stage of agglomeration. Rather, the person who takes the initiative uses the rhetoric of ethnicity or locality in order to enhance the economic and social strength of their group in the market. It usually starts with the remark that market traders from Kars (an Eastern province), for instance, are gaining a stronger position in the market and are starting to dominate it. The market traders of a different ethnic or local group begin to worry that their people will get marginalized in the market and that their positions will be weakened. The person who initiates the agglomeration eventually, if not immediately, gains an upper hand in the operation of the joint enterprises. The agglomeration of enterprises works for the benefit of initiators more than for other partners. Yet the economic interest of these initiators, even if it is the driving force, is hidden during the formation and operation of the joint enterprises. Operating under the economy of scale, however, benefits the participants both economically and socially.

Curbing Competition

In the overall operation of the market, market traders use three strategies to curb competition. One of them, as discussed above, is the agglomeration of enterprises. The other two strategies are specializing in produce type and restricting entry to the market. Traditionally marketplaces in Ankara were places for small-scale enterprises. These traders worked with hal, transported their produce with rental trucks, and operated under the strict price control of the local municipalities. In the last decade, the traditional operation of the market has changed. An important marker in this change is the change in the dominant mode of access to produce that I discussed before. An increase in agglomeration of the formerly tiny enterprises along the lines of ethnicity or locality of traders has decreased the competition. Former competitors have become joint enterprise holders. Consequently, the number of competitors has decreased dramatically. Although the number of people who earn an income in the market has increased, the number of enterprises has not increased proportionally. Ankara’s 73 marketplaces have come under the control of around 45 sirket/companies.

One must predict that competition would be much stiffer among these profit-maximizing companies. Although competition in the market is still going on, one way traders have, to some extent, overcome the obstacles of competition is by specializing in certain produce. Every company’s area of specialty is quite specific. One company works on buying and selling citrus fruits, another specializes in buying and selling apples, yet another sells potatoes and onions, while other companies sell tomatoes and peppers in the summer, and cabbages and cauliflower in the winter, so on and so forth. Each company has its specific suppliers or farmers. Although there are around 500 stalls in every marketplace, and dozens of stalls selling the same kind of produce, the same foodstuff has identical prices simply because it is primarily supplied by the same company or by coordinated companies. There are rival companies that offer the same kind of produce. They are able, however, to sell out their supplies without engaging in intensive competition. This does not mean that these traders can set the price according to their desire. There are several factors affecting price setting. Since some foodstuffs are perishables, these companies sell out their supplies at a lower prices in the late hours of the day. Despite efforts to curb competition, prices in the marketplace are much cheaper than supermarket prices.

The ILO (1972) used "easy access" as one of its defining characteristics of the informal sector. However, although one can enter into the informal market in Ankara as a marginal trader and work at the margin of the marketplace, there is little chance for the newcomer to maintain his/her place without the help of an "insider" in the market. As will be explored in the following section, the CMT is dominated by powerful companies. Without their consent, one cannot enter the market and operate a business. Domination of marketplaces by traders who come from a limited number of provinces, and the significance of ethnicity or locality, show that access to the market is only possible with the help of other traders. A significant implication of this reality is that traders curb competition by not allowing newcomers to operate at a large scale and to compete with the existing large-scale market traders.

Closure of Opportunities

A significant arena in which competition and cooperation among market traders can be observed is in struggles over control of the CMT. Control of the CMT is vital for market traders, since it is the body that distributes opportunities to some members and excludes others from these economic opportunities. More precisely, power within the CMT is crucial in order to: (a) restrict opportunities to members of the dominant groups; (b) open access to some municipal authorities and establish contacts with political parties and with those who hold power in local offices; and (c) expand the scope of opportunities for the dominant group members outside the marketing business.

Because the stakes are high, the struggle for holding power in the CMT becomes very intense. To this end, leaders of profit maximizing and large-scale companies use what Weber calls "externally identifiable characteristics" as the basis for struggling for power and privileges. These people approach their local or ethnic fellow traders using the rhetoric of local origin and ethnicity; they play the politics of local origin and ethnicity in order to hold and acquire power, therefore to monopolize opportunities via the CMT. No one group is strong enough to win the election and to dominate the CMT by itself. Group leaders communicate with each other in order to form an alliance. However, securing an alliance is not easy. The purpose of these alliances is to win the election, and therefore to maximize rewards by restricting access of opportunities to the members of allied groups. The struggle for winning the election occurs among these rival allied groups. Eligible members cast votes for only one of the rival lists. In the end of the struggle, one of these rival allied groups comes to power and declares its victory over the others. In Weber’s terms, the winners become the "insiders" while the losers become the "outsiders." After the election, the de jure and de facto possession of CMT opportunities is controlled by the executive body of the CMT. It becomes a meeting place for profitable deals within and outside the market.

Two of the most significant aspects of power within the market revolve around the distribution of stalls and the increasing control over the marketplaces. CMT officials try to expand the operations of their own companies by acquiring more and better stalls in every marketplace. They also distribute such stalls among the members of their allied groups. In the distribution of stalls, the interests of the dominant status group members are taken into consideration. When a new marketplace is set up, the CMT officials direct their group members to acquire a stall in the officially designated area.

Companies that have more stalls in the marketplace maximize economic opportunities and tend to dominate the marketplaces. They become primary suppliers of foodstuffs to customers and influential actors in controlling supply and therefore in determining prices. The relative strength of these dominant companies visualizes in part the invisible aspect of price setting in the marketplace.

Weber points out that economic opportunities can be closed to insiders too. My findings support this claim. There is a differential distribution of opportunities among the insiders. Not every member of the dominant group benefits to the same degree from economic opportunities. Scarce resources are thus typically distributed among the core group members and closed to the rest of the group. In some cases, scarce resources are unequally distributed even among the CMT officials themselves. The relative power of each group and its share in the distribution of opportunities are determined according to the extent of each group’s members support.

Control of the CMT executive body’s social and economic opportunities goes beyond the market. As Weber argues, the dominant group tries to expand opportunities in other fields. The CMT officials maintain contacts with municipalities, state bureaucrats, and political parties in order to expand the scope of economic and social opportunities for their groups. As observed by De Soto (1989), having a post with representative power gives the post holder access to a variety of opportunities, and allows him/her to "keep in touch" with the "redistributive combines" for more profitable deals.

Maintaining Power and Solidarity of Outsiders

The success of the CMT officials in maintaining their power depends on two important factors: the extent to which they benefit their group members, and the extent to which they eliminate the formation of powerful opposition. Through these means, the dominant group strengthens its economic power, in the market and therefore enhances its competitive edge.

Such relations, however, generate opposition among the excluded traders. Parkin (1979) argues that exclusionary social closure entails the creation of a group, class, or stratum. This restriction is not imposed on an individual basis; rather, the dominant group focuses on weakening the position of rival competitors. It is a case of restriction of resources and opportunities of one group or coalition of groups against other groups. Since exclusion is based on local origins and/or ethnicity, the excluded market traders from the moment of losing power in the general congress of the CMT attempt to form an opposition platform, that is, a solidaristic or "usurpationary closure" in Parkin’s term. Parkin (1979, p. 74) argues that "usurpation is that type of social closure mounted by a group in response to its outsider status and the collective experiences of exclusion. What usurpationary actions have in common is the aim of biting into the resources and benefits accruing to dominant groups in society." While it is generally accepted that those who hold power use resources for their own interests, completely restricting access to resources is considered discrimination against the outsiders. The rival competitive group uses this restriction as a propaganda tool in every informal gathering of market traders. When increasing numbers of market traders are excluded from resource allocation, opposition arises against the dominant group; the greater the restriction of resources by the dominant group, the more serious the challenge to the dominant group. Through usurpationary demands and complaining, the opposition market traders engage in solidaristic actions which bite into resources and benefits accruing to the dominant group.

In order to maintain its power and to disperse the formation of opposition, the dominant group takes steps to open some opportunities to outsiders. This partial opening usually occurs on an individual basis. Individual market traders who are not closely associated with the dominant group sometimes make usurpationary demands, and the dominant group sometimes meets these demands. In so doing, the dominant group gives the impression that it is obtaining these opportunities for the benefit of outsiders and therefore blurs the fact that these opportunities are not, in fact, open to every outsider market trader. This strategy helps the CMT officials maintain their power. In short, activities for expanding the power of dominant large scale enterprises and for maintaining this power through the channels of the CMT are balanced by the need to maintain support from group members and to disperse the power of opposition groups. Middle-size firm owners complain that big companies have too much power in the market, while they themselves suffer in a subordinate position. Even when they make such complaints, however, they keep their hope that they may themselves "bite into" resources and opportunities.

Summary

This article tried to explore competition in one of the most important visible branches within the informal sector: marketing foodstuff in Ankara. I used a combination of research methods to generate data in order to address different aspects of competition. I identified three groups of traders -- profit maximizers, risk minimizers, and marginal traders -- whose strategies for coping with competition are quite different. The first group acts "rationally" in terms of maximizing profits. Profit maximizers developed three related strategies: changing the mode of access to produce, attracting more customers to the marketplace, and selling high volume at a competitive price. Risk minimizers tended to operate outside the product domain of profit maximizers. Marginal traders were irregular, self-employed traders. Their aim in being in the market is to make extra money to add to their family budget.

Ethnic or local origin plays an important role in achieving the economy of scale. Some self-employed or lumpen capitalist traders search to construct economies of scale among members of their ethnic or local groups in order to reduce costs via agglomeration of their small enterprises. Agglomeration of enterprises along ethnic or locality lines leads to power struggles for market domination among the largest and most influential market traders.

The largest and most influential market traders use ethnicity or locality to monopolize opportunities and to restrict them to a limited circle of people. Control of the CMT (Chamber of Marketplace Traders) plays a significant role in monopolizing opportunities and also in opening personal opportunities for the influential leaders of the CMT. The largest and most influential traders seek support from their local and/or ethnic groups in order to increase their opportunities for controlling the CMT. However, the composition of traders along lines of locality or ethnicity does not allow any one group, by itself, to get control of the CMT. Group leaders must therefore form alliances in order to control the organization. This situation leads to several, fragile allied groups in the market.

In the light of these findings, there are three points to put forward. First, although market trading is individualistic, some traders downplay individualism in order to increase their chance of success and to stay competitive by enlarging their operations. Second, market traders in a competitive environment find ways to curb competition. Third, informal market trading, as opposed to the common view in the literature, is not easy for newcomers, who do not have close contacts with the existing market traders, to enter. Market trading is not a "refuge occupation" for everybody; it is a "privilege" one to enter and secure a permanent place in the market in order to "make out" at the margin of the urban economy.

References