Economics 1021A/B Study Guide - Quiz Guide: Financialization, Systemic Risk, Financial Innovation

• School: Western University
• Department: Economics
• Course: Economics 1021A/B
• Professor: bruce hammond

Document Summary

Liberal market economies firms coordinate their activities primarily via hierarchies and competitive market arrangements. Market relationships: arm"s-length exchange of goods or services in a context of competition and formal contracting. All firms face a set of coordinating institutions whose character is not fully under their control. Actors should invest more extensively in switchable assets (assets whose value can be realized if diverted to other purposes. Coordinated market economies firms depend more heavily on non-market relationships to coordinate their endeavours with other actors and to construct their core competencies. More reliance on collaborative relationships to build the competencies of the firm. Markets and hierarchies are also important, but the firms draw on a further set of organizations and institutions for support. Deliberative institutions are important, because it can thicken the common knowledge of the group. They encourage the relevant actors to engage in collective discussions and to reach agreements with each other.