Article: "Institutions" by Douglass North

1. On p. 97 North writes: "Cooperation is difficult to sustain when the game is not repeated (or there is an endgame), when information on the other players is lacking, and when there are large numbers of players." For each of these three, concisely describe why this is the case. (Note that this question is worth 6 points instead of the usual 3 points.)

2. In describing the transition from local trade within a village or between nearby villages to long distance trade, North writes on p.99: "The development of long-distance trade, perhaps through caravans or lengthy ship voyages, requires a sharp break in the characteristics of an economic structure." According to North what is the key difference between a society in which people are engaged only in local trade and a society in which people are also engaged in long-distance trade--the "sharp break" in characteristics? According to North, how is this related to the concept of "economies of scale"?