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Introduction

Published online by Cambridge University Press:  30 October 2009

Mari Sako
Affiliation:
London School of Economics and Political Science
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Summary

A decade ago, Arthur Okun, in his book Prices and Quantities, drew a distinction between auction and customer product markets. He focused on the latter, the ‘vast nonauction area’ (Okun, 1981, p. 134), which in his view prevailed in industrial economies outside of trading in financial assets and commodities. In customer markets, business firms set prices and wages to reflect long-term considerations to reduce costs, as well as short-term changes in markets. The long-term ‘invisible handshake’ (in Okun's words) between customers and suppliers, and between employers and employees, creates price rigidities which Okun identified as a cause of stagflation.

This book is also about the vast nonauction area in industrial economies. But its topic, buyer—supplier relations, is more narrowly microeconomic than Okun's, and its methodology very different in its reliance on a case-study-based socio-economic inquiry. This book identifies variations within customer markets in the way firms interact with each other, some by ‘invisible handshake’ and others by ‘visible handshaking’ (Aoki, 1984). Such variations have consequences not only for the way in which prices are determined, but also for other performance parameters, perhaps the most important of which today is quality.

Since Okun wrote, global competition in manufacturing has become more about coping with volatile market demands and rapid technological change.

Type
Chapter
Information
Price, Quality and Trust
Inter-firm Relations in Britain and Japan
, pp. 1 - 6
Publisher: Cambridge University Press
Print publication year: 1992

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  • Introduction
  • Mari Sako, London School of Economics and Political Science
  • Book: Price, Quality and Trust
  • Online publication: 30 October 2009
  • Chapter DOI: https://doi.org/10.1017/CBO9780511520723.001
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  • Introduction
  • Mari Sako, London School of Economics and Political Science
  • Book: Price, Quality and Trust
  • Online publication: 30 October 2009
  • Chapter DOI: https://doi.org/10.1017/CBO9780511520723.001
Available formats
×

Save book to Google Drive

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.

  • Introduction
  • Mari Sako, London School of Economics and Political Science
  • Book: Price, Quality and Trust
  • Online publication: 30 October 2009
  • Chapter DOI: https://doi.org/10.1017/CBO9780511520723.001
Available formats
×