Economic power

Economic power

There is no agreed-upon definition of power in economics. At least five definitions of power have been used:

*purchasing power, i.e., the ability of any amount of money to buy goods and services. Those with more assets (or, more correctly, net worth) have more power of this sort. The greater the liquidity of one's assets, the greater one's purchasing power is.

* monopoly power, i.e., the ability to set prices or wages. This is the opposite of the situation in a perfectly competitive market, in which supply and demand set prices.

*bargaining power, i.e., the ability of players in a bargaining game to influence the outcome, which is the players sharing rule for something (a prize, a cake, access to resources). See e.g. Muthoo, Abhinay 1999: Bargaining theory with applications, Cambridge University Press. To be able to bargain prices ( toggle prices, or rewards etc... ). Also see definition of barganing or to bargain

* managerial power, i.e., the ability of managers to threaten their employees with firing or other penalties for not following orders or for not giving in satisfying reports. This exists if there is a "cost of job loss", especially due to the existence of unemployment and workers' lack of sufficient assets to survive without working for pay.

* class power in Marxian political economy: under capitalism this refers to a situation where a minority (the capitalists) in society controls the means of production and thus is able to exploit the majority (the workers).

In general, those with more power also have more freedom than others and may be able to exploit others in society and/or cause some sort of market failure.

It is worth noting that information is also a form of power, in the case of two agents entering into a contract; if one agent knows that their deal with turn out significantly better (or worse) than the other suspects, then they are exercising a form of informational economic power. See Information asymmetry


Wikimedia Foundation. 2010.

Игры ⚽ Поможем написать реферат

Look at other dictionaries:

  • economic power — UK US noun ECONOMICS ► [C] POLITICS a country that has a lot of importance because it can produce, buy, and sell a lot of products or services: » China is a very important economic power. ► [U] the fact of having a lot of influence because of… …   Financial and business terms

  • Economic democracy — is a socioeconomic philosophy that suggests a shift in decision making power from a small minority of corporate shareholders to a larger majority of public stakeholders. There is no single definition or approach for economic democracy, but most… …   Wikipedia

  • Economic freedom — is freedom to produce, trade and consume any goods and services acquired without the use of force, fraud or theft. Economic freedom is embodied in the rule of law, property rights and freedom of contract, and characterized by external and… …   Wikipedia

  • power — is the concept which is at the heart of the subject of social stratification . It is therefore not surprising that we have seen so many disputes concerning its meaning (including disputes about what particular sociologists meant when they used… …   Dictionary of sociology

  • Economic activism — involves using economic power for change. Both conservative and liberal groups use economic activism to boycott companies and organizations that do not agree with their particular political, religious, or social values. Conversely, it also means… …   Wikipedia

  • Power — may refer to*any ability to effect change;political or social * Power (philosophy) ** Political power, power held by a person or group in a country s political system ** Reserve power, a power exercised by a head of state in certain exceptional… …   Wikipedia

  • Economic egalitarianism — is a state of economic affairs in which the participants of a society are of equal standing and equal access to all the economic resources in terms of economic power, wealth, and contribution. It is a founding principle of various forms of… …   Wikipedia

  • economic imperialism — UK US noun [U] often DISAPPROVING ECONOMICS, POLITICS ► a situation in which one country has a lot of economic power or influence over others: »Many rants on economic imperialism have come from those who distrust the capitalist system …   Financial and business terms

  • economic strength — economic power, financial security …   English contemporary dictionary

  • Economic Affairs — ▪ 2006 Introduction In 2005 rising U.S. deficits, tight monetary policies, and higher oil prices triggered by hurricane damage in the Gulf of Mexico were moderating influences on the world economy and on U.S. stock markets, but some other… …   Universalium

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”