Phoney phones not "just on the street" anymore

Today's L.A. Times has a story about a bargain hunter who bought a pair of ear phones on-line at a price "too good to be true," only to discover that it was too good to be true in fact. The ear phones were fakes. "It used to be that counterfeits was what you saw on a street corner in New York," market researcher Lauren Freedman said. "Now the whole world is a street corner."

Street corner indeed. The connection between street markets and pirated goods is one reason outdoor markets should be shut down-- according to some critics. But as the Times points out, property that has been stolen, in one form or another, can be sold just about anywhere. "Counterfeit toothpaste showed up in discount stores in June and fake wine has been popping up at auctions." Vendors hawking $50 "Rolex" watches from street corners hardly have a corner on the market.

If anything dealing with a vendor face to face on the street makes it easier for the consumer to avoid getting fooled. Many vendors try to sell from the same spot on a regular basis. Repeat appearances, in the language of Eric Posner, signal prospective customers that the vendor is in it for the long haul. "I'm here every day. My reputation is on the line. If I rip you off, you won't buy from me again. And you'll tell your neighbors." EBay and similar on-line markets do their best to recreate this. Sellers may be rated by buyers. But it still feels different, when I buy on line, than when I buy from someone in person.

This added trust is magnified when I know the person I'm dealing with is the "owner." An "agency problem" arises anytime an owner has to hire someone else to look after their interests. The boss can never be completely sure that their employee is putting the firm's interests first. But many street vendors are sole proprietors. Their interest and the firm's are one. If the reputation of the vendor's business suffers, it hits the vendor right in the pocketbook and, perhaps more importantly, their sense of esteem in their community.

Instead of viewing them as a "pirates bazaar," perhaps street markets should been seen more like a neighborhood exchange. I'll buy from my neighbor before I buy from a stranger.