What Is the Benefit of Formal,rule-Based,impersonal Exchange with Third-Party Enforcement

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The Answer is .As the economy expands,the scale and scope of transactions rise,calling for the emergence of third-party enforcement through formal market-supporting institutions.
.Initial costs per transaction are high,because of the high costs of formal institutions.Credit bureaus,courts,police,and lawyers are expensive.
.Small villages usually cannot afford (and do not need)formal institutions.
.Over time,however,third-party enforcement is likely to facilitate the widening of markets,because unfamiliar parties,people who are not your friends and who would have been deterred to transact with you before,are now confident enough to trade with you (and others).
.Formal market-supporting institutions facilitate more new entries (such as all the new start-ups you and entrepreneurs can found and all these banks that provide financing)by lowering transaction costs.Consequently,firms are able to grow,and economies to expand.

What Is the Benefit of Formal,rule-Based,impersonal Exchange with Third-Party Enforcement

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What Is the Benefit of Formal,rule-Based,impersonal Exchange with Third-Party Enforcement

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