low-income and agrarian economies. Three areas in particular have been highlighted as critical to the success of liberalizing reforms: the institutional framework required for market systems to operate efficiently, encompassing social norms as well as formal legal regulations; the role of risk and transactions costs; and the political economy that shapes agricultural pricing policy and its local level implementation (Jones, forthcoming). While theoretical understanding of these issues has deepened beyond the simplistic interpretations of rural market behavior that underlay some of the advocacy of the liberalization and privatization of agricultural marketing in the past, the operational policy implications (especially for the most effective use of aid resources) often remain uncertain. Experience does not provide support for many traditional forms of state intervention in agricultural markets such as price controls, support pricing, and state monopoly procurement and distribution. Instead, it draws attention to the importance of an institutional and policy environment that reduces transactions costs and increases competition. Achieving this may involve difficult and unclear trade-offs. For example, reducing obstacles to collective action by market participants may assist the development of more efficient risk-sharing arrangements, but it may also strengthen the influence of national lobby groups seeking subsidies or the power of local elites over their clients.