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.

Related work:: Scitovsky, Tibor: Pricetakers' Plenty: A Neglected Benefit of Capitalism. In: Kyklos, Dec 1985, Vol. 38 Issue 4, S. 517-516

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

Shelfmark:: S/M.33.7

Access:: Free access

5.18 o Also, if the price maker’s quantity adjustments exhaust the limited scope he had for making such adjustment at a profit, he restores his potential for profitable quantity adjustments every time he his prices, because he will always set them at their most profitable level, which is above the MC of what he sells and below the MVP of what he buys* Employment creation through quantity adjustment has its counterpart also\..in product markets and may there be called product creation and quality adjustment. For part of the fringe benefits created by nonprice competition among sellers is their search for buyers* unfilled needs, for new products and improvements of existing products for which there exists a profitable potential market, waiting to be opened up. That is an important source of technical progress and growth, which again is a manifestation of the producers* excess supply, created by the gap, in this case the potential gap between price and MC. To put it succinctly, R&D is unprofitable without producers* domination of product markets* Let me now relate the theoretical model to today’s reality* I think it describes pretty well what happens in product markets, where sellers continue to dominate* In factor markets, however, price makers and price takers have more or less changed places; and there is an excess supply of labor rather than an excess demand, and nonprice competition for labor is not much in evidence, except in Japan and a few So markets, certainly Japan*s, exceptions are important && with the way in which factor markets have changed fore discussing the Japanese easel

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