Markets and Nonmarket Environments

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Market and Nonmarket Environments Market environment includes those interactions (which involve voluntary economic transactions and the exchange of property) between firms, suppliers and customers that are governed by Markets and Contracts. Nonmarket environment is composed of the social, political and legal arrangements that structure interactions (between the firm and individuals, interest groups, govt. entities, and the public which are intermediated not by markets but by public and private institutions) outside of, but in conjunction with, markets and contracts. Public institutions differ from markets because of characteristics such as majority rule, due process, broad enfranchisement, collective action, and publicness.…show more content…
Institutions can also be established by private means. Such institutions include the insurance system and voluntary agreements such as those pertaining to SUV collision safety and carbon dioxide reduction in the European Union. The nonmarket environment also includes nongovernmental institutions such as news media and public sentiment. Institutions are not unitary bodies. 4. Information pertains to what the interested parties know or believe about the issues and the forces affecting their development. Information refers to what interests and institutional officeholders know about the issues the consequences of alternative courses of action and the preferences of those concerned with an issue. Information is also frequently at the heart of strategies for addressing nonmarket issues. Lobbying, for example: involves providing information officeholders about the likely consequences of policy alternatives for their constituents and the public more broadly. Information provision is also important in regulatory rule making because of the complexity of most regulatory issues and because agencies are required to develop a recording supporting their actions. Information can also be an instrument of nonmarket competition. Information can also be important to the progress of issues.
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