Discriminatory, Status-based Wages among Tradition-oriented, Stochastically Trading Coconut Producers

A robust model of discrimination is presented; even if there is a significant minority without a taste for discrimination and even if there is capital transfer among entrepreneurs with different tastes for discrimination, no entrant can profit by violating the discriminatory custom. The key innovation in this model of discrimination is that markets are in some sense smaller than the Walrasian market. All traders have a chance of trading with one another. And at the time of trade there is no other equally satisfactory alternative trading partner. This assumption corresponds to empirical sociological studies that similarly find markets to be small.