I study how demand-side factors affect markups and propose a new methodology to correct for bias in misallocation losses generated by variable markups. Using data on Indian firms, I first document two key correlations: marginal costs and markups are increasing in firm size. I then explore how these correlations are driven by two factors: the assortative matching of wealthier consumers to larger firms, and the lower demand elasticity of wealthier consumers. Results on how firms across the size distribution change their markups in response to exogenous demand shocks to poor households provide support to the demand-based markup channel: producing better quality and selling to wealthier, less demand elastic households lead larger firms to incur higher costs and charge higher markups. This demand-driven markup dispersion lowers gains from reallocation because firms also adjust their markups in response to policies that may improve allocative efficiency. I show that firms' pass-through of changes in their costs into prices is a sufficient statistic to account for these endogenous markup adjustments. Gains from reallocation are 50 percent lower due to demand-driven variable markups.
{"title":"Demand for Quality, Variable Markups and Misallocation: Evidence from India","authors":"Apoorv Gupta","doi":"10.2139/ssrn.3685273","DOIUrl":"https://doi.org/10.2139/ssrn.3685273","url":null,"abstract":"I study how demand-side factors affect markups and propose a new methodology to correct for bias in misallocation losses generated by variable markups. Using data on Indian firms, I first document two key correlations: marginal costs and markups are increasing in firm size. I then explore how these correlations are driven by two factors: the assortative matching of wealthier consumers to larger firms, and the lower demand elasticity of wealthier consumers. Results on how firms across the size distribution change their markups in response to exogenous demand shocks to poor households provide support to the demand-based markup channel: producing better quality and selling to wealthier, less demand elastic households lead larger firms to incur higher costs and charge higher markups. This demand-driven markup dispersion lowers gains from reallocation because firms also adjust their markups in response to policies that may improve allocative efficiency. I show that firms' pass-through of changes in their costs into prices is a sufficient statistic to account for these endogenous markup adjustments. Gains from reallocation are 50 percent lower due to demand-driven variable markups.","PeriodicalId":18516,"journal":{"name":"Microeconomics: Production","volume":"80 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2020-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"76219894","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We estimate income elasticities of demand for three energy and six base metal commodities and their group aggregates. The elasticities, which vary with income levels, are estimated using a panel autoregressive distributed lag model covering the period 1965–2017, for up to 63 countries. We report three findings. First, most income elasticities are inversely proportional to income and decline rapidly as income rises. This implies commodity demand growth slows as economies develop, consistent with the dematerialization hypothesis. At median per capita income levels, the elasticity for metals (in aggregate) was 0.9, while that of energy was 0.7. Second, there is significant heterogeneity between commodities, both in terms of income elasticities and in terms of the performance of the model, with larger commodities and group aggregates performing better. Finally, we find evidence of substitution between commodities (e.g. oil/coal, aluminum/copper), estimated by the inclusion of the prices of similar commodities.
{"title":"The Role of Income and Substitution in Commodity Demand","authors":"J. Baffes, A. Kabundi, P. Nagle","doi":"10.1596/1813-9450-9122","DOIUrl":"https://doi.org/10.1596/1813-9450-9122","url":null,"abstract":"\u0000 We estimate income elasticities of demand for three energy and six base metal commodities and their group aggregates. The elasticities, which vary with income levels, are estimated using a panel autoregressive distributed lag model covering the period 1965–2017, for up to 63 countries. We report three findings. First, most income elasticities are inversely proportional to income and decline rapidly as income rises. This implies commodity demand growth slows as economies develop, consistent with the dematerialization hypothesis. At median per capita income levels, the elasticity for metals (in aggregate) was 0.9, while that of energy was 0.7. Second, there is significant heterogeneity between commodities, both in terms of income elasticities and in terms of the performance of the model, with larger commodities and group aggregates performing better. Finally, we find evidence of substitution between commodities (e.g. oil/coal, aluminum/copper), estimated by the inclusion of the prices of similar commodities.","PeriodicalId":18516,"journal":{"name":"Microeconomics: Production","volume":"39 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2020-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"78823932","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Using a novel dataset from a large supermarket retailer in a European country that never engages in temporary sales, we establish that prices are actually as sticky as regular prices. Circumventing the debate on whether sales have to be included or excluded from price adjustments, we find evidence consistent with state-dependent price setting in a multiproduct firm. In particular, our data exhibit responsiveness of prices to changes to aggregate demand shifts, a more than trivial share of very small price changes, synchronization of price changes across items especially within the same product category. Price rigidity and the extent of state-dependence is heterogeneous across items. In particular, we find that pricing of top sales items (and even more of private label ones) is more flexible and state-dependent, which is consistent with price setting in a multiproduct firm characterized by rational inattention.
{"title":"Everyday Regular Prices","authors":"N. Berardi, Federico Ravenna, M. Samano","doi":"10.2139/ssrn.3517176","DOIUrl":"https://doi.org/10.2139/ssrn.3517176","url":null,"abstract":"Using a novel dataset from a large supermarket retailer in a European country that never engages in temporary sales, we establish that prices are actually as sticky as regular prices. Circumventing the debate on whether sales have to be included or excluded from price adjustments, we find evidence consistent with state-dependent price setting in a multiproduct firm. In particular, our data exhibit responsiveness of prices to changes to aggregate demand shifts, a more than trivial share of very small price changes, synchronization of price changes across items especially within the same product category. Price rigidity and the extent of state-dependence is heterogeneous across items. In particular, we find that pricing of top sales items (and even more of private label ones) is more flexible and state-dependent, which is consistent with price setting in a multiproduct firm characterized by rational inattention.","PeriodicalId":18516,"journal":{"name":"Microeconomics: Production","volume":"25 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2020-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"80681295","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Marcelo Henrique Shinkoda, M. Braga, Valéria Gama Fully Bressan
Farrell and Shapiro (F&S, 2010) proposed an Upward Pricing Pressure (UPP) approach to merger screening between two symmetrical firms. According to them, this UPP approach is more practical than concentration-based methods. However, it fails because it does not incorporate all the theoretical effects which set the price. This article sets out to close two specific gaps in the UPP. First, the case of the industry which has a set of firms with asymmetric costs is addressed. Mathiesen et al. (2012) show that UPP screening could present a false-positive in asymmetric cases. To correct this, the study includes a competitive fringe in the feedback effects, and thereby rectifies the symmetric and asymmetric effects in pricing pressure. Second, when the asymmetric effect comes from only dominant side, the lack of representativeness of demand is then addressed. The study shows that the model presented by F&S is valid only for cases where the elasticity of demand is unitary. If that is not the case, the original model is biased. Finally, after filling both gaps, the validity of the relevant-market term in industrial organization is discussed and was concluded to be out of date. For the authors, the regulator just needs to set a channel between products in a convex set to establish a merger screening.
{"title":"Upward Pricing Pressure in Oligopoly With Competitive Fringe","authors":"Marcelo Henrique Shinkoda, M. Braga, Valéria Gama Fully Bressan","doi":"10.2139/ssrn.3713945","DOIUrl":"https://doi.org/10.2139/ssrn.3713945","url":null,"abstract":"Farrell and Shapiro (F&S, 2010) proposed an Upward Pricing Pressure (UPP) approach to merger screening between two symmetrical firms. According to them, this UPP approach is more practical than concentration-based methods. However, it fails because it does not incorporate all the theoretical effects which set the price. This article sets out to close two specific gaps in the UPP. First, the case of the industry which has a set of firms with asymmetric costs is addressed. Mathiesen et al. (2012) show that UPP screening could present a false-positive in asymmetric cases. To correct this, the study includes a competitive fringe in the feedback effects, and thereby rectifies the symmetric and asymmetric effects in pricing pressure. Second, when the asymmetric effect comes from only dominant side, the lack of representativeness of demand is then addressed. The study shows that the model presented by F&S is valid only for cases where the elasticity of demand is unitary. If that is not the case, the original model is biased. Finally, after filling both gaps, the validity of the relevant-market term in industrial organization is discussed and was concluded to be out of date. For the authors, the regulator just needs to set a channel between products in a convex set to establish a merger screening.","PeriodicalId":18516,"journal":{"name":"Microeconomics: Production","volume":"42 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2020-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"88858418","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We estimate the cost of transporting corn and the resulting degree of spatial differentiation among downstream firms that buy corn from upstream farmers and examine whether such differentiation softens competition enabling buyers to exert market power (defined as the ability to pay a price for corn that is below its marginal value product net of processing cost). We estimate a structural model of spatial competition using corn procurement data from the U.S. state of Indiana from 2004 to 2014. We adopt a strategy that allows us to estimate firm-level structural parameters while using aggregate data. Our results return a transportation cost of $0.12 per bushel per mile (5% of the corn price under average distance traveled), which provides evidence of spatial differentiation among buyers. The estimated average markdown is $0.80 per bushel (16% of the average corn price in the sample), of which $0.34 is explained by spatial differentiation and the rest by the fact that firms operated under binding capacity constraints. We also find that corn prices paid to farmers at the mill gate are independent of distance between the plant and the farm, providing evidence that firms do not engage in spatial price discrimination. Finally, we evaluate the effect of hypothetical mergers on input markets and farm surplus. A merger between nearby ethanol producers eases competition, increases markdowns by 20%, and triggers a sizable reduction in farm surplus. In contrast, a merger between distant buyers has little effect on competition and markdowns.
{"title":"Spatial Differentiation and Market Power in Input Procurement: Evidence from a Structural Model of the Corn Market","authors":"Jinho Jung, Juan P. Sesmero, R. Siebert","doi":"10.2139/ssrn.3536733","DOIUrl":"https://doi.org/10.2139/ssrn.3536733","url":null,"abstract":"We estimate the cost of transporting corn and the resulting degree of spatial differentiation among downstream firms that buy corn from upstream farmers and examine whether such differentiation softens competition enabling buyers to exert market power (defined as the ability to pay a price for corn that is below its marginal value product net of processing cost). We estimate a structural model of spatial competition using corn procurement data from the U.S. state of Indiana from 2004 to 2014. We adopt a strategy that allows us to estimate firm-level structural parameters while using aggregate data. Our results return a transportation cost of $0.12 per bushel per mile (5% of the corn price under average distance traveled), which provides evidence of spatial differentiation among buyers. The estimated average markdown is $0.80 per bushel (16% of the average corn price in the sample), of which $0.34 is explained by spatial differentiation and the rest by the fact that firms operated under binding capacity constraints. We also find that corn prices paid to farmers at the mill gate are independent of distance between the plant and the farm, providing evidence that firms do not engage in spatial price discrimination. Finally, we evaluate the effect of hypothetical mergers on input markets and farm surplus. A merger between nearby ethanol producers eases competition, increases markdowns by 20%, and triggers a sizable reduction in farm surplus. In contrast, a merger between distant buyers has little effect on competition and markdowns.","PeriodicalId":18516,"journal":{"name":"Microeconomics: Production","volume":"14 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2020-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"72994984","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
High-growth firms have been widely studied in advanced countries, but little is known about such stellar performers in Africa. Using establishment-level data from Ethiopia, this paper finds that the incidence of high-growth firms stands at an average of 7 percent, a figure comparable to that of advanced countries. High-growth episodes are short-lived, and the likelihood of survival or a subsequent episode is not any higher for high-growth firms. It is difficult for firms to sustain high growth, and the likelihood of a repeated episode is low. There is only a 6.5 percent chance that a manufacturing plant in Ethiopia will repeat a high-growth event in the subsequent three-year period. This likelihood is not greater than that of plants that did not experience high growth in the previous period. The paper explores the drivers of high growth and finds a tight link between exemplary performance and initial plant productivity, which is robust to many controls, including plant location. Plants located in Ethiopia's capital city or agglomerations have a higher probability of high growth. And high growth in plant employment is found to be self-reinforcing, that is, past high-growth experience is positively and significantly associated with subsequent growth in firm productivity.
{"title":"Firms Far Up: Productivity, Agglomeration, and High-Growth Firms in Ethiopia","authors":"A. G. Goswami","doi":"10.1596/1813-9450-9099","DOIUrl":"https://doi.org/10.1596/1813-9450-9099","url":null,"abstract":"High-growth firms have been widely studied in advanced countries, but little is known about such stellar performers in Africa. Using establishment-level data from Ethiopia, this paper finds that the incidence of high-growth firms stands at an average of 7 percent, a figure comparable to that of advanced countries. High-growth episodes are short-lived, and the likelihood of survival or a subsequent episode is not any higher for high-growth firms. It is difficult for firms to sustain high growth, and the likelihood of a repeated episode is low. There is only a 6.5 percent chance that a manufacturing plant in Ethiopia will repeat a high-growth event in the subsequent three-year period. This likelihood is not greater than that of plants that did not experience high growth in the previous period. The paper explores the drivers of high growth and finds a tight link between exemplary performance and initial plant productivity, which is robust to many controls, including plant location. Plants located in Ethiopia's capital city or agglomerations have a higher probability of high growth. And high growth in plant employment is found to be self-reinforcing, that is, past high-growth experience is positively and significantly associated with subsequent growth in firm productivity.","PeriodicalId":18516,"journal":{"name":"Microeconomics: Production","volume":"5 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-12-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"88824756","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The purpose of this study was to determine the influence of capital, production, technology, and labor to total revenue. This study was conducted using data collection techniques as much as 200 respondents. Data was collected by questionnaire and use software Smart PLS v.3 as an aid in calculating the results of the research. Once the research is done, it could be concluded from this research that capital, production, technology and manpower positive and significant impact on revenue. Capital and labor indirect effect on revenues through production.
{"title":"Effect of Capital, Technology, Labor, and Production of Revenues","authors":"Cintya Kusuma","doi":"10.2139/ssrn.3511245","DOIUrl":"https://doi.org/10.2139/ssrn.3511245","url":null,"abstract":"The purpose of this study was to determine the influence of capital, production, technology, and labor to total revenue. This study was conducted using data collection techniques as much as 200 respondents. Data was collected by questionnaire and use software Smart PLS v.3 as an aid in calculating the results of the research. Once the research is done, it could be concluded from this research that capital, production, technology and manpower positive and significant impact on revenue. Capital and labor indirect effect on revenues through production.","PeriodicalId":18516,"journal":{"name":"Microeconomics: Production","volume":"88 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-12-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"83846479","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Two‐sided platforms are often coupled with exclusive hardware products that connect two sides of users, the consumers of the hardware product (i.e., buyers) and the application developers (i.e., sellers). The hardware product in the platform business model introduces three important issues that are not yet well understood in the literature of platform pricing: potentially downward‐trending production cost, product quality improvements, and consumers’ strategic behaviors. Using analytical modeling, our study explicitly factors in these issues in analyzing a monopoly platform owner’s two‐sided pricing problem. The platform sequentially introduces and prices quality‐improving hardware products, for which the costliness of quality may decrease. Strategic buyers make purchasing and upgrading decisions, which dynamically determine the buyer‐side network size. Meanwhile, the seller‐side network size is determined endogenously. We find that, an increase in the likelihood or magnitude of the future costliness reduction raises the initial buyer‐side price of the low‐quality product and lowers the seller‐side fee. This strategy, in turn, creates an indirect intertemporal effect that allows the platform to also raise the buyer‐side price(s) of the product(s) sold later. These findings contrast with conventional wisdom and provide an economic explanation for premium introductory pricing of many platform products. Moreover, we find that strengthening the network effect can result in more pronounced increases in the buyer‐side prices.
{"title":"Platform Pricing with Strategic Buyers: The Impact of Future Production Cost","authors":"Mei Lin, X. Pan, Quan Zheng","doi":"10.2139/ssrn.2372461","DOIUrl":"https://doi.org/10.2139/ssrn.2372461","url":null,"abstract":"Two‐sided platforms are often coupled with exclusive hardware products that connect two sides of users, the consumers of the hardware product (i.e., buyers) and the application developers (i.e., sellers). The hardware product in the platform business model introduces three important issues that are not yet well understood in the literature of platform pricing: potentially downward‐trending production cost, product quality improvements, and consumers’ strategic behaviors. Using analytical modeling, our study explicitly factors in these issues in analyzing a monopoly platform owner’s two‐sided pricing problem. The platform sequentially introduces and prices quality‐improving hardware products, for which the costliness of quality may decrease. Strategic buyers make purchasing and upgrading decisions, which dynamically determine the buyer‐side network size. Meanwhile, the seller‐side network size is determined endogenously. We find that, an increase in the likelihood or magnitude of the future costliness reduction raises the initial buyer‐side price of the low‐quality product and lowers the seller‐side fee. This strategy, in turn, creates an indirect intertemporal effect that allows the platform to also raise the buyer‐side price(s) of the product(s) sold later. These findings contrast with conventional wisdom and provide an economic explanation for premium introductory pricing of many platform products. Moreover, we find that strengthening the network effect can result in more pronounced increases in the buyer‐side prices.","PeriodicalId":18516,"journal":{"name":"Microeconomics: Production","volume":"23 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-12-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"86706990","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Advertising on e-commerce marketplaces, wherein sponsored product listings are interleaved with organic product listings, is a large and growing phenomenon. In this paper, we both theoretically and empirically study whether including sponsored listings improves or hurts the overall quality and relevance of the set of products displayed to consumers. Our theoretical analysis reveals that the relevance of the ads to the consumers' search queries depends on the level of information asymmetry between the marketplace owner and the sellers who sell products with different degrees of relevance. Specifically, when information asymmetry is low (high), i.e., the platform can (cannot) easily distinguish between high- and low-relevance sellers, then low-relevance (high-relevance) sellers have a greater incentive to advertise. However, even when low-relevance products are displayed as ads, consumers end up finding well-matching products as long as search and evaluation costs are reasonable; therefore, the overall impact on sales is relatively small while the marketplace benefits from the additional revenue from selling ads. We obtain data from a large-scale field experiment run at Flipkart, a leading online marketplace in India, and find that various empirical patterns implied by our theoretical results hold in the data. Our study provides several practical implications for managers of online marketplaces.
{"title":"Advertising on Online Marketplaces: Information Asymmetry and the Relevance of Sponsored Listings","authors":"Vibhanshu Abhishek, Kinshuk Jerath, Siddhartha Sharma","doi":"10.2139/ssrn.3013468","DOIUrl":"https://doi.org/10.2139/ssrn.3013468","url":null,"abstract":"Advertising on e-commerce marketplaces, wherein sponsored product listings are interleaved with organic product listings, is a large and growing phenomenon. In this paper, we both theoretically and empirically study whether including sponsored listings improves or hurts the overall quality and relevance of the set of products displayed to consumers. Our theoretical analysis reveals that the relevance of the ads to the consumers' search queries depends on the level of information asymmetry between the marketplace owner and the sellers who sell products with different degrees of relevance. Specifically, when information asymmetry is low (high), i.e., the platform can (cannot) easily distinguish between high- and low-relevance sellers, then low-relevance (high-relevance) sellers have a greater incentive to advertise. However, even when low-relevance products are displayed as ads, consumers end up finding well-matching products as long as search and evaluation costs are reasonable; therefore, the overall impact on sales is relatively small while the marketplace benefits from the additional revenue from selling ads. We obtain data from a large-scale field experiment run at Flipkart, a leading online marketplace in India, and find that various empirical patterns implied by our theoretical results hold in the data. Our study provides several practical implications for managers of online marketplaces.","PeriodicalId":18516,"journal":{"name":"Microeconomics: Production","volume":"1 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-12-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"89565921","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Market democracies struggle with economic insecurity and growing inequality, presenting new threats to democracy. The revival of “political economy” offers a frame for understanding the relationship between productivity and justice in market societies. It reintegrates power and the social and material context—institutions, ideology, and technology—into our analysis of social relations of production, or how we make and distribute what we need and want to have. Organizations and individuals, alone and in networks, struggle over how much of a society’s production happens in a market sphere, how much happens in nonmarket relations, and how embedded those aspects that do occur in markets are in social relations of mutual obligation and solidarism. These struggles at the micro, meso, and macro levels involve efforts to shape institutions, ideology, and technology in ways that trade off productivity and power, both in the short and long term, including through the production and exploitation of atavistic status-hierarchies, primarily race, gender, and immigration. The outcome of this struggle shapes the divergent paths that diverse market societies take, from oligarchic to egalitarian, and their stability as pluralistic democracies.
{"title":"Power and Productivity: Institutions, Ideology, and Technology in Political Economy","authors":"Y. Benkler","doi":"10.2139/ssrn.3503962","DOIUrl":"https://doi.org/10.2139/ssrn.3503962","url":null,"abstract":"Market democracies struggle with economic insecurity and growing inequality, presenting new threats to democracy. The revival of “political economy” offers a frame for understanding the relationship between productivity and justice in market societies. It reintegrates power and the social and material context—institutions, ideology, and technology—into our analysis of social relations of production, or how we make and distribute what we need and want to have. Organizations and individuals, alone and in networks, struggle over how much of a society’s production happens in a market sphere, how much happens in nonmarket relations, and how embedded those aspects that do occur in markets are in social relations of mutual obligation and solidarism. These struggles at the micro, meso, and macro levels involve efforts to shape institutions, ideology, and technology in ways that trade off productivity and power, both in the short and long term, including through the production and exploitation of atavistic status-hierarchies, primarily race, gender, and immigration. The outcome of this struggle shapes the divergent paths that diverse market societies take, from oligarchic to egalitarian, and their stability as pluralistic democracies.","PeriodicalId":18516,"journal":{"name":"Microeconomics: Production","volume":"48 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-12-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"89790691","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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