02 Economic and Nonstate Institutions

• Nonmarket transaction


  Reciprocity, transfer, and redistribution - exchange of goods or labor, redistribution of income, or combination of transfer and reciprocity
• Reciprocity


  Exchange of goods or labor between individuals in a community, including direct barter or gift exchange
• Transfer


  Redistribution of income not matched by exchange of goods and services
• Redistribution


  can be considered as a combination of the features of transfer and reciprocity, where

  the economic exchange involves the collection of goods from members, the pooling of these goods,

  and then the redistribution of these goods among the same members.
• Market system


  Economic system with free flow of goods between private individuals and firms, with limited government participation
• Invisible hand


  Integrates self-interest and competition in the market to bring about socially optimum result without government intervention
• Market


  Mechanism that brings buyers and sellers together for transactions, not necessarily a physical place
• Prices


  Signaling device to indicate value of goods/services to buyers and sellers, guiding their actions
• Specialization


  is another requirement for a market economy. Critical to the market economy is the ability to

  produce goods and services efficiently. It is easier to produce goods more efficiently with specialization.
• Barter


  Traditional means of exchange by swapping goods for goods
• Market transaction


  Parties sell goods/services in exchange for cash from consumers
• Free-market economy


  Price of goods/services determined by supply and demand forces
• State role in market


  Regulates prices to protect consumer interests, sets minimum wage, exercises monopoly of legitimate force
• Command economy


  Government takes over market functions of production and distribution of essential goods/services
• Taxes


  Compulsory contributions to government for revenue and spending
• Market and economic organizations


  • Corporate environmental users
  • Financial institutions like banks
  • Corporations
  • Stock corporations
  • Nonstock corporations
  • Cooperatives
  • Trade/labor unions
• Civil society organizations


  • Academic and science-based
  • Mass media
  • Religious
  • Nongovernmental
  • People's organizations
• International organization


  Organization established by treaty or instrument governed by international law, with own legal personality
• Transnational advocacy group


  Self-organized advocacy groups across state borders, pursuing wider public interest
• Development agencies


  Formed in response to crises like war damage and industrial decline, to stimulate economic development