The political economy of knowledge markets.
There really are no such things as pure market –markets that can be understood solely in economic terms. Every market system is embedded in and affect by social and political realities the value of anything exchanged depends strongly on the context of the transaction. The value of the money watch mainly social: it buys the owner status in a society that looks up to or envies people who can afford to purchase and display such items.
Sociologist Harrison White has said that sociology, economies, and political science are the three lenses needed to see organizations fully no one discipline can capture their whole meaning. We strongly agree that social , economic and political realities must be taken fully into account to understand markets for knowledge . if the political reality of an organizations is such that calculating and secretive hoarders of knowledge thrive, then potential knowledge buyers will have no currency valuable enough to tempt them to share their expertise . Knowledge exchange will be minimal. If it is considered a sign of weakness or incompetence within the culture of an organization to admit to problem you can’t solve on your own, then the social cost of buying knowledge will be too high. Once again, the knowledge market will not operate well. At mobile oil, where disapproval of bragging is embedded in the culture, the efficiency of the knowledge market was reduced because knowledge owners are reluctant to advertise their knowledge and were distrusted by their colleagues if they did. While these cultural norms can have positive impact too , they inhibit internal knowledge markets we will look first at the players in the knowledge market: the buyers ,sellers and brokers who taken part in knowledge transaction and drive knowledge markets.
4. The price system.
A price system in economics serves the function of regulating the production and consumption of goods by determining their monetary or trade value. There are three different types of price systems in economics: free, mixed and fixed. Each of these is characterized by the amount of control that forces outside of the market have on prices and especially the factors of production, which include land, labor and capital.
All modern societies use price systems. Price systems motivate both consumers and producers to make decisions. For example, in most cases, a consumer will choose the product that is the least expensive, and producers choose to produce only products that will make profit. A price system informs both of these decisions without the producer and consumer having to communicate directly.
In a free price system, prices are set naturally by supply and demand in the economy with no outside interference. The higher the demand for a product, the more incentive producers have to make it, but producers are also motivated to keep prices down to attract more consumers. This creates a situation in which both consumers and producers are motivated by price.
In free price systems, competition among producers allows for prices to stabilize themselves. Free price systems create capitalism, which is distinguished as a market in which individuals are allowed to control all the factors of production, with no government intervention. Profits are unlimited in free price systems and are the primary motivation for producers.
In a price system, the market is not left to its own devices; prices instead are controlled by forces outside of the economy. Fixed price systems occur in centrally planned economies where the government is in complete control of all of the factors of production. Supply and demand do not determine prices, rather the government planners decide what to produce, how much to produce and how much to charge. Although the government decides what to produce in this economy, it doesn’t change the needs of consumers, and this can result in scarcity of some items and a surplus of others. Fixed price systems are most common in countries that have communist or socialist governments.
Fixed and free price systems are both extremes, one having no regulation and the other completely controlled by the government. Most nations cannot exist with a price system that is purely fixed or purely free. A mixed price system is a combination of these extremes and produces an economy with both government regulation and free enterprise. Most modern economies have a price system that falls somewhere between a free price system and a fixed price system. The United States is one example of a mixed price system that falls closer to the free market side, and countries such as China and Russia have price systems that are more fixed.