Price Takers' Plenty in a Model of Pure Capitalism.

Scitovsky, Tibor

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Document type:: Collected items

Collection:: Josef Steindl Collection

Title:: Price Takers' Plenty in a Model of Pure Capitalism.

Author:: Scitovsky, Tibor

Scope:: Kopie eines Typoskripts, 27 Blätter, mit handschriftlicher Korrektur und Korrektur mit Korrekturfolie, Paginierung von 5.1-5.20 und von 3.21-3.26

Year of publication:: 1983

Source material date:: [November 1983]

Language:: English

Note:: Draft.

JEL Classification:: D41 [Market Structure, Pricing, and Design: Perfect Competition]

Shelfmark:: S/M.33.7

Rights of use:: In Copyright

Access:: Free access

DOI:: https://doi.org/10.48671/nls.js.AC14446418

5.10 Their employment, of course, will produce extra output, which has to be sold; but a MVP of labor higher than the wage indicates that it is profitable to employ more labor even if product prices have to be lowered or advertising expenditures increased in order to sell the additional output produced by the additional workers. If the argument has an unrealistic, even utopian ring, that merely shows how far we have progressed from employer-dominated labor markets. For the price-make buyer's situation I just depicted is the exact counterpart of the price-maker seller's; and there is nothing unusual about a seller's welcoming new buyers, anxious to sell as much more as he can, and making a good profit on his extra sales. The only difference bet’veen the two cases is that the monopolistic seller wants customers able to pay, the monopsonistic employer v;ants workers able to work; and the ability to work is more widely and evenly distributed than the ability to pay. However, the price-maker employer's excess demand for labor is limited, because the MVP of labor is a decreasing function of the employer's level of employment; and as it falls to equality with the wage, it eliminates the employer's marginal gain, the gap between the MVP and the wage, which creates

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