Re: Question about Say's Law

[Gil Skillman <gskillman@xxxxxxxxxxxx>]

Max wrote--

> I vaguely remember the quality-price thing.  Was there much follow-up to
> that paper?

Yes and no.  It was primarily a survey of the literature on the phenomenon,
most of the threads of which kept going.  There are some critiques of the
general idea of asymmetric information as a basis for non-market-clearing
equilibrium, esp. in the context of labor markets, and responses to those
critiques. The price/quality idea informed the early 90s mainstream debate
on dual labor markets and interindustry wage differentials, with Dickens
and Lang, Summers and Katz and others carrying the ball, pretty effectively
I thought, for the existence of market segmentation.






> And, by the way, contra Max, persistent ("equilibrium") shortages are most
> definitely not "impossible" in micro.  They can arise due to monopsony
> power or a phenomenon Stiglitz refers to as "the dependence of quality on
> price." It is typical to have supra-market-clearing equilibrium wages in
> the latter scenario.
>
> Gil
>
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