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Relational InequalitiesAn Organizational Approach$
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Donald Tomaskovic-Devey and Dustin Avent-Holt

Print publication date: 2019

Print ISBN-13: 9780190624422

Published to Oxford Scholarship Online: January 2019

DOI: 10.1093/oso/9780190624422.001.0001

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Organizational Surplus and Rising Inequality

Organizational Surplus and Rising Inequality

(p.195) 8 Organizational Surplus and Rising Inequality
Relational Inequalities

Donald Tomaskovic-Devey

Dustin Avent-Holt

Oxford University Press

Product markets are organized through social relations of power and networks of mutual exchange. Powerful firms exert control over prices and contracts. Increasingly they are also adjusting their organizational boundaries, as well as the basic legal and regulatory environment, to favor their or their network’s market power. Firms desire to avoid competition and develop business strategies, from seeking market niches to patent protection to collusion as a means to protect themselves. Market power is a product of closure processes. When that power is used to extract higher prices from customers or lower prices from suppliers, exploitation is operating. Embedded trust is the alternative to exploitation. When powerful firms lobby governments to adjust regulations in their favor or legalize predatory behavior, they are undertaking a claims-making process. These ideas are illustrated with case studies of pharmaceutical, information technology, and financial service industries and with more global analyses of the trade-off between exploitative and embedded exchange and rising between-firm inequality.

Keywords:   market power, rent-sharing, Frightful Five, exchange network, embedded exchange, relational wealth, implicit contract

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