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Popkin: Public choice and rural development

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Popkin. 1981. Public choice and rural development: Free riders, lemons, and institutional design. in Public Choice and Rural Development, Cliff Russell and Norman Nicholson, eds. Washington DC: Johns Hopkins Press.

Development economists long assumed that only markets matter, they ignored institutions

Peasants are maximizing production given their skills and technology: just give them education and help them use new technology, and they will turn "sand into gold."

There are two key problems to development in peasant societies, which may require nonmarket (but not noneconomic) solutions: free riding (Olson) and the lemon problem (Akerlof 1970).

"Effective institutions are ... free rider proof, not free rider prone; and appropriate divisions of labor can minimize problems with lemons." (75) "Rural development requires linkage between effort and reward."