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Incentive provision and coordination as market functions

Incentive provision and coordination as market functions The market has both a coordination function and an incentive function. The first theorem of welfare economics is all about coordination; the principal-agent model is all about incentives. What is the relative importance of the market in carrying out these two functions? While there has been a shift in economic theory in the past thirty years from emphasizing the coordination role to emphasizing the incentive role, it is not clear whether this reflects a new and deeper understanding of the market. Understanding the market's functions, in real economies, may be key for understanding the degree to which redistribution in them is feasible. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal for Labour Market Research Springer Journals

Incentive provision and coordination as market functions

Roemer, John
Journal for Labour Market Research , Volume 43 (1) – Mar 30, 2010
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References (22)

Publisher
Springer Journals
Copyright
Copyright © 2010 by Institut für Arbeitsmarkt- und Berufsforschung
Subject
Economics; Labor Economics; Sociology, general; Human Resource Management; Economic Policy; Regional/Spatial Science; Population Economics
ISSN
1614-3485
eISSN
1867-8343
DOI
10.1007/s12651-010-0027-5
Publisher site
See Article on Publisher Site

Abstract

The market has both a coordination function and an incentive function. The first theorem of welfare economics is all about coordination; the principal-agent model is all about incentives. What is the relative importance of the market in carrying out these two functions? While there has been a shift in economic theory in the past thirty years from emphasizing the coordination role to emphasizing the incentive role, it is not clear whether this reflects a new and deeper understanding of the market. Understanding the market's functions, in real economies, may be key for understanding the degree to which redistribution in them is feasible.

Journal

Journal for Labour Market Research – Springer Journals

Published: Mar 30, 2010

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