Feedback-by and for institutions

The three functions discussed above of picking up signals, balancing interests, and implementing decisions are not always sharply distinguished. For private goods traded in markets, the market itself produces signals on scarcity-future and present, likely and plausible-while balancing needs andexecuting trades. But transaction between agents in a market can affect others (as with pollution). In this case, supplementary institutions (an air protection agency) can perform these functions and represent the interests of those affected (box 3.6).