Inclusion Gains in Markets for Scarce Products

Abstract

Microeconomic models of equilibrium are not real descriptions of reality. Even more so in markets where scarcity is a growing source of concern. The pricing mechanism in these cases is not only misleading but can lead to more scarcity and disorganization of markets for products dependent on natural resources. The inclusion gains concept defined and discussed in this paper, the new criteria it highlights for defining the frontier between firm and market transactions and the consequent restructuring of markets for scarce products might be therefore a step in the right direction, both theoretically and in practice. Inclusion gains can replace or complement the transaction costs notion to understand and ameliorate both the internal as well as the external (market) organization of firms.