Prices and profits flow to whoever controls a scarce resource that others need, not to whoever works hardest. A cafe on a busy station concourse earns high rents not because its coffee is special but because the landlord holds the scarce asset (location) and can extract the surplus, so the barista and the coffee itself stay cheap.
Sellers who cannot read each individual's willingness to pay design choices that make customers sort themselves: premium versions, awkward queues, time delays, or self-labeling 'value' lines. The cost difference between a regular and a luxury product is often trivial; the price gap exists to capture more from those who will pay more while still selling to those who won't.
When an action imposes a cost on others that the actor does not pay (congestion, pollution), the market overproduces it because the private price omits the social cost. Charging the actor the marginal cost they inflict, such as a congestion toll calibrated to the delay imposed on others, realigns their incentive with the real cost.
When one side knows more than the other (sellers know a used car's faults, the sick know their health risk), the informed party's advantage drives good products or low-risk customers out until trade shrinks or fails. Insurance and used-goods markets can unravel not from greed but from the asymmetry of who knows what.
Harford attributes much persistent national poverty to governance where those in power rationally plunder and block productive activity rather than to lack of resources or ability. Using Cameroon as his case, he argues that when stealing and obstruction pay better than building, talented people spend effort on rent-seeking and the economy stays poor.
Harford credits China's rapid enrichment to reforms that let people keep more of what they produced, such as farmers selling surplus above a quota and special economic zones opened to trade and investment. The lesson he draws is that growth followed from changing incentives so that effort was rewarded, not from a single master plan.