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Social Capital Formation in Australian Rural Communities: The Role of the Stock and Station Agent

Data from the Australian stock and station agent industry can be used to examine several unresolved issues concerning how to characterize and measure social capital. The evidence reveals two distinct types of social capitalone long-term and innate to a community and the other more volatile, subject to individual decisions. The two types are causally linked, the inherent strain providing propitious conditions for particular kinds of investment. Social-capital investment is measured through the proxy of goodwill as revealed in takeover analyses.