A famous dictum from economist Adam Smith is that “theextent of the market” limi

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A famous dictum from economist Adam Smith is that “theextent of the market” limits thedivision of labor.In the Wealth of Nations, he put it this way (Book 1, Chp. 3): “As it is the power of exchanging that givesoccasion to the division of labour, so the extent of this division must always be limited by the extent of thatpower, or, in other words, by the extent of the market. When the market is very small, no person can haveany encouragement to dedicate himself entirely to one employment, for want of the power to exchange allthat surplus part of the produce of his own labour, which is over and above his own consumption, for such parts of the produce of other men's labour as he has occasion for.”For purposes of the essay, let’s stipulate that productivity-driven economic growth requires a division of labor (which implies specialization). Per Smith, then, specialization—and therefore productivity-driven economic growth—depends on a growing extent of the market. Douglas North argues that a growing extent of the market depends on “institutions” that encourage cooperation “when the game is not repeated (or there is an end game), when information on the other players is lacking, and when there are large numbers of players.”

Based on the arguments in the above article, explain the types of institutions that produce productivity- driven economic growth.

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the Adam Smith had written the book and it is big participation in the economic theory and the well-known economist

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