top of page

Market Mechanism

General scientific definition

The use of money used by buyers and sellers leads to an efficient allocation of goods and services, as well-performing firms/actors will receive more customers and more money, while less-performing actors will be pushed out of the market. It will also make underperforming managers increase their effort and reduce slack. (Hart, 1983)

Relevant substantive theories

  • Theory of market economies, Classical economics


Hart, O. D. (1983). The Market Mechanism as an Incentive Scheme. The Bell Journal of Economics, 14(2), 366-382. doi:10.2307/3003639

Smith, A. (1791). An Inquiry Into the Nature and Causes of the Wealth of Nations: Legrand.


bottom of page