factor market
factor marketThe bargaining system in which the prices of the various factors of production are determined. In most economies there is no one institution in which factor prices are determined. Wage rates in Europe are typically decided by a series of negotiations between employers or groups of employers and trade unions. These negotiations are linked in the sense that what happens in one wage bargain has effects on others, but there is no formal organization of this interaction. Collective bargaining over wages is less common in the US. Even in Europe many occupations, for example domestic cleaners, have no collective bargaining at all. Negotiations over rents of land and the terms on which capital is made available to firms are similarly very decentralized. The argument for referring to this non-system as a market is that it involves a fair degree of competition, and generates a set of factor prices.
[The entire page is 157 words long]
Join eNotes
Over 3,500 study guides, question and answer forums, literature criticism, reference content, and much more!
Oxford University Press Titles
