This setting lets you change the way you view articles. You can choose to have articles open in a dialog window, a new tab, or directly in the same window.
Open in Dialog
Open in New Tab
Open in same window

Journal of Economic Perspectives: Vol. 4 No. 1 (Winter 1990)

Expand

Quick Tools:

Print Article Summary
Export Citation
Sign up for Email Alerts Follow us on Twitter

Explore:

JEP - All Issues


The Benefits of Asymmetric Markets

Article Citation

Scitovsky, Tibor. 1990. "The Benefits of Asymmetric Markets." Journal of Economic Perspectives, 4(1): 135-148.

DOI: 10.1257/jep.4.1.135

Abstract

Economists are often so mesmerized by the magic of perfect competition that they neglect or fail to notice other, equally important achievements of the real market economy around us, most of which seem to result from monopoly tempered by competition and competition tempered by monopoly. Here, we drop the one assumption underlying general equilibrium theory that does perhaps the most violence to reality: that all economic agents possess all the market information relevant to the transactions they enter or contemplate entering into. Knowledge is power, and those on the better informed side of the market can exploit the people on its other side. Such power is the main source of monopoly power, its exploitation yields monopoly profit, and rivalry among market participants who wield such power is the main form of monopolistic competition. The root cause of the unequal distribution of knowledge between buyers and sellers is the division of labor, which causes everybody to know more than others about their own specialty and less about other people's specialties than others know about them. The farther the division of labor proceeds, the wider becomes the gulf between the specialist's knowledge and the nonspecialist's ignorance of each specialty. Such disparity in the knowledge and preparedness of buyers and sellers to deal with each other and to stand up to each other is an important and unavoidable feature of today's market economy, which has received surprisingly little attention.

Article Full-Text Access

Full-text Article (Complimentary)

Authors

Scitovsky, Tibor (Stanford U)

JEL Classifications

022: Microeconomic Theory--General

Comments

View Comments on This Article (0) | Login to post a comment


Journal of Economic Perspectives


Quick Tools:

Sign up for Email Alerts

Follow us on Twitter

Subscription Information
(Institutional Administrator Access)

Explore:

JEP - All Issues

Virtual Field Journals


AEA Member Login:


AEAweb | AEA Journals | Contact Us