Guest seminar: Organizing Price Formation - Labor market wage setting in Sweden

Mats Jutterström and German Bender, fom Stockholm School of Economics, present "Organizing Price Formation - Labor market wage setting in Sweden".

Abstract:

This paper addresses the organizational explanation of how market prices arise, specifically targeting the question of stability and change in organized price systems for individual markets. In contrast to the two emergent orders of price formation – mutual adaptation and institutions (shared beliefs) – organizing is a decided order. Much due to this difference it has been argued that organizing is a dynamic order. Our empirical study of price formation – wage setting in a labor market – however, demonstrates long-term organizational stability. Based on this case, we argue that conditions in the interplay between the three fundamental forms of order can offset the dynamic organizational characteristics, explaining organizational stability. To reach this conclusion, we conduct a nuanced analysis of how the price formation system is organized, conceptually relevant for comparisons of price systems.

Key words: Price Formation, Organizing, Market, Organizational Stability, Labor Market, Pricing, Price systems, Organization outside organizations