Market institutions and economic evolution

Our cognitive limitations cause us to rely on institutions to guide reasona ble behaviour; market institutions reduce the costs of search, negotiation, and monitoring entailed in making single transactions. The making of marke ts requires an investment of immaterial capital, the major share of which t ypically is provided by those who expect to be very active on one side of t he market. This 'external organisation' provides producers with information for the development of new products; by simplifying transactions it also a llows consumers greater scope for developing consumption capabilities. Thus the evolution of institutions guides the evolution of goods and services.