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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
Sources
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.
Examples
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