Property rights are important for economic exchange, but many governments don't protect them. Private market organizations can fill this gap by providing an institutional structure to enforce agreements, but with this power comes the ability to extort group members. Under what circumstances, then, will private organizations provide a stable environment for economic activity? Based on market case studies and a representative survey of traders in Lagos, Nigeria, this book argues that threats from the government can force an association to behave in ways that promote trade. The findings challenge the conventional wisdom that private good governance in developing countries thrives when the government keeps its hands off private group affairs. Instead, the author argues, leaders among traders behave in ways that promote trade primarily because of the threat of government intrusion.

‘Grossman has written a gem of a book. Private governance of the day-to-day operations of urban informal markets is under-theorized and notoriously difficult to study. Grossman brilliantly addresses these challenges, highlighting the surprising benefits of the threat of government predation and conducting an impressive survey of Lagos traders informed by rich case studies. Anyone wanting to understand the political economy of informal spaces or looking for an outstanding example of theoretically-informed fieldwork should read this book.’

Gwyneth McClendon - New York University

‘This book is a timely and significant contribution to understanding the complex dynamics of the economic landscape of Lagos informal market structures. This comprehensive assessment of market associations provides not only grounded knowledge, but also new insights into the internal workings of the informal economy, everyday politics and interactions with the state. It is a remarkable reference book for researchers in urban studies and governance.’

Taibat Lawanson - University of Lagos

‘Based on extensive fieldwork in Lagos, Grossman investigates the inner workings of Nigerian market activity. The book illustrates how private governance institutions often govern complex market arrangements and do so better in the shadow of the state. It offers a new and compelling analysis of the relationship between states and markets that challenges those studying developing economies to pay closer attention to governance provided by market participants themselves. It is a rigorous, fascinating, and important contribution to our understanding of institutions. Highly recommended.’

David Skarbek - Brown University

‘Can private governance promote trade and economic development? Shelby Grossman offers a persuasive theory that nonstate governance performs best precisely when states also regulate economic affairs. Meticulous survey and qualitative evidence from markets in Nigeria reveals how informal leaders promote cooperation and enforce property rights precisely when trying to avoid government meddling. The result is a fresh perspective on some of the most fundamental questions about state-society relations in political economy.’

Alisha Caroline Holland - Harvard University