Economic

Institution
s
 it refers to a network of commercial
organizations that determine how goods and
services are produced, generated,
distributed, and purchased
 a company or an organization that deals
with money or with managing the
distribution of money, goods, and services in
an economy.
 Banks, government organizations, and
investment funds are all economic
institutions: Technical assistance will be
needed to rebuild essential economic
institutions after this upheaval.
Manufacturer
Wholesaler
Retailer
Non Market
Institutions
 they do not entail the
exchange of cash for the
rendering of service or
provision of goods
 Reciprocity
 In sociology, it is defined as the a
system of voluntary exchange among
individuals based on the understanding
that the giving of favor by one will be
reciprocated in the future either to the
giver or to someone else.
In Economics, it is defined as an
exchange of equal advantages
 this would include direct barter or
simultaneous exchange of goods, or
gift exchange where the return for
foods given or labor rendered is
delayed.
Examples:
 When neighbor exchange food for
labor rendered
 When farmers rotate among their
farms to help in cultivating the land
 Types of
Reciprocity
 Generalized Reciprocity
 Balanced Reciprocity
 Negative Reciprocity
Generalized Reciprocity
 Is giving something without
the anticipation of an instant
return.
Balanced Reciprocity
 Is giving out of something
with the anticipation of
immediate return.
 Negative Reciprocity

 Occurs when the exchange of

something already involves taking
advantage of someone or the situation.
Most of the time, this type of exchange
involves trickery, intimidation, or hard
bargaining
 Transfer

It refers to payments or transactions

where there is no value added to the
economy.
 There is no additional production of
goods and services but just a transfer of
money from private hands to
government.
 entails a redistribution of income that is
not matched by actual exchange of
goods and services.
 Example of transfer:

 donation or financial assistance from a

richer relative
 farm subsidies given to farmers by the
government
 Redistribution
 It considered as 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 good among the same
members.
 Market
Institutions
influential actors of markets
such as socio-economies of
consumer, consumer profile,
cultural and religious actors,
regulative actors, etc. Learn
more in: The Challenge of
International Market
Segmentation in Emerging
Markets
 Market System
 is a type of economic system that
allows the free flow of goods between
and among private individuals and
firms with very limited participation
from the government.
 Markets and prices are important
features of the market system
 is the extensive use of capital goods
and technology
 Invisible hand
 integrates both the idea of self-
interest and competition in the
market place, which brings about
a socially optimum result even in
the absence of government
intervention.
 the desire to maximize the gains,
both by the buyers and the sellers,
leads them to actions that will
 Market
 a mechanism and not
necessarily a place which
brings buyers and sellers
together for a desired
allocation.
 Specialization
 another requirement for a market
economy
 ability to produce goods and services
efficiently
 the division of labor
 contributes to efficiency by taking
advantage of the differences in each and
every persons abilities
 Barter
 swapping of goods for goods
 traditional exchange
 difficult to carry out because
the presence of mutual
coincidence of wants or
transacting parties finding
and having each other desire
 Market transactions
 involves parties who sell their
goods and services in
exchange for cash from
consumers
 Market Economy
 is one where the production,
distribution and consumption
of goods and services operate
through these forms of
exchange.
 interaction comes in the
form of a purchase at a given
price of a good service
 Free Market Economy
 is one where the price of a good
or service is determined by the
forces of supply.
 is a rational mechanism to
allocate goods and services to
competing wants of consumers.
Example:
sari-sari stores and the food
industry
 State-Market
Relationships
 it is in this aspect that the state
plays an important role in the
market.
 it comes regulate prices to
protect the interest of the
consuming protect.
 the state, through government,
comes in to regulate the prices of
the services, which technically is
 Labor
 considered a commodity, except
that in this case, the sellers of the
service are the workers, while the
consumers are the factories and
the producers
 termed as a producer good, since
it is an input to the production of
goods and services
 Monetary Policy
 a reduction in interest rates
so to encourage investor to
borrow money and invest in
business to spur production
 Fiscal Policy
 it refers to the use of taxation and
government spending to influence
the level of income or aggregate
output.
 is used by the government
revenue collection (mainly taxes)
and expenditure (spending) to
influence the economy.
 Main instruments of
fiscal policy
 Aggregate demand and level
of activity
Savings and Investment in
economy
 the distribution of Income
 Command Economy
and Socialist Economy
 when the government takes over
the functions of the market in
producing and distributing
essential goods and services
 the market forces of supply and
demand deciding on what to
produce, how to produce, and for
whom to produce.