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

payments and the bonuses. A much more important and very definite advantage of the system is that despite the producers' loss of market power over wages, it gives them the same kind of excess demandfor labor that their dominant position in the labor market gave A them under the ordinary v/age system. To show that that is so, express the price or average cost of labor, AC^ , as AC^ = w + qAR and the marginal cost of labor, MC-^, as KC^ = w + a MVP , (1) (2) where MVP is the marginal value product of labor, w the annual sum of monthly wage payments, AR the firm’s average-revenue per worker, and q the workers' share of revenue distributed among them in the form of bonuses. Subtracting (2) from (1) shows that the the MC of labor is below its AC in the proportion in which the MVP of a worker short of his average gross product: AG 1 - MC 1 = q(AR - MVP) falls

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