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Power

Author

Listed:
  • Samuel Bowles

    () (Santa Fe Institute, University of Siena and University of Massachusetts)

  • Herbert Gintis

    (Santa Fe Institute and Central European University)

Abstract

We consider the exercise of power in competitive markets for goods, labour and credit. We offer a definition of power and show that if contracts are incomplete it may be exercised either in Pareto-improving ways or to the disadvantage of those without power. Contrasting conceptions of power including bargaining power, market power, and consumer sovereignty are considered. Because the exercise of power may alter prices and other aspects of exchanges, abstracting from power may miss essential aspects of an economy. The political aspect of private exchanges challenges conventional ideas about the appropriate roles of market and political competition in ensuring the efficiency and accountability of economic decisions. JEL Categories:

Suggested Citation

  • Samuel Bowles & Herbert Gintis, 2007. "Power," UMASS Amherst Economics Working Papers 2007-03, University of Massachusetts Amherst, Department of Economics.
  • Handle: RePEc:ums:papers:2007-03
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    References listed on IDEAS

    as
    1. Chichilnisky, Graciela & Heal, Geoffrey, 1984. "Patterns of power: bargaining and incentives in two-person games," Journal of Public Economics, Elsevier, vol. 23(3), pages 333-349, April.
    2. Alchian, Armen A & Demsetz, Harold, 1972. "Production , Information Costs, and Economic Organization," American Economic Review, American Economic Association, vol. 62(5), pages 777-795, December.
    3. repec:cup:apsrev:v:56:y:1962:i:04:p:947-952_00 is not listed on IDEAS
    4. Aghion, Philippe & Tirole, Jean, 1997. "Formal and Real Authority in Organizations," Journal of Political Economy, University of Chicago Press, vol. 105(1), pages 1-29, February.
    5. Lerner, Abba P, 1972. "The Economics and Politics of Consumer Sovereignty," American Economic Review, American Economic Association, vol. 62(2), pages 258-266, May.
    6. Bowles, Samuel & Gintis, Herbert, 1993. "A Political and Economic Case for the Democratic Enterprise," Economics and Philosophy, Cambridge University Press, vol. 9(01), pages 75-100, April.
    7. Lundberg, Shelly & Pollak, Robert A, 1994. "Noncooperative Bargaining Models of Marriage," American Economic Review, American Economic Association, vol. 84(2), pages 132-137, May.
    8. Rotemberg, Julio J, 1993. "Power in Profit-Maximizing Organizations," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 2(2), pages 165-198, Summer.
    9. Basu, Kaushik, 1986. "One Kind of Power," Oxford Economic Papers, Oxford University Press, vol. 38(2), pages 259-282, July.
    10. Klein, Benjamin & Leffler, Keith B, 1981. "The Role of Market Forces in Assuring Contractual Performance," Journal of Political Economy, University of Chicago Press, vol. 89(4), pages 615-641, August.
    11. L. S. Shapley & Martin Shubik, 1967. "Ownership and the Production Function," The Quarterly Journal of Economics, Oxford University Press, vol. 81(1), pages 88-111.
    12. repec:cup:apsrev:v:48:y:1954:i:03:p:787-792_00 is not listed on IDEAS
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    More about this item

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D52 - Microeconomics - - General Equilibrium and Disequilibrium - - - Incomplete Markets
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law

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