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

5.7 The simplest and most obvious of those cheaper ways is the opening up of foreign markets through imperialism or the lowering of barriex's to trade. Historically, that may well have been the first response of price makers to their excess supplies. A recent book, for example, blames the backwardness of British product design on the ease with which "the Empire and the British sphere of influence in Latin .America provided markets for the products they should have updated." ((Cf. Andrei-; Tylecote, The Causes of the Present Inflation, p.26.)) The expansion of the domestic market through the creation of a buyers' paradise may well have been a much later development; and it is significant that it started and had its full flowering in America until not so long ago.(g very isolated and isolationist country/^ The creation (or non-creation) of a buyers' market by price-maker sellers under the impact of their excess supply, or as if they had an excess supply, is only a part of the welfare implications of the .sellers' dominance in product markets. I propose, however, to proceed now to the parallel case of the buyers' dominance in the labor market and other factor markets and rather deal with that at greater length. The behavior of buyers as price makers and its impact on buyer-dominated markets are in many respects the exact mirror image of the characteristics of the seller-dominated markets just discussed. They are nevertheless worth discussing in detail, even in more detail, and for three reasons. First of all, a mirror image of an original is not identical with it and, in this case, not that easy to visualise. Secondly, the special nature of the labor market does create some significant differences. Lastly, an all-important diffei'ence between product and factor markets is that whereas producers

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