From my latest essay:
What [Meir] Kohn points out (in other chapters) is that medieval guilds, which we think of as backward institutions, helped to solve the lemons problem long before government inspection came along. Each guild jealously guarded its reputation. If a member of a guild were caught selling a substandard product, he would lose his status as a guild member, and effectively lose his livelihood. If Mexico City had a “taco guild,” then that guild would provide sanitary taco stands with its seal of approval, and you as a consumer could pay the appropriate price for a safe taco.
What you just read is a short excerpt of an essay that is highly condensed to begin with, riffing on the work of William Easterly and Meir Kohn. I think that the research Kohn is doing very important, and he generously shares it on his web site. Check it out.
Kohn appeared at Pete Boettke’s GMU workshop earlier this week. I ventured across the river (I live in Maryland) to see him, and it was well worth the costs of gas, parking, and time.