As the textbooks tell us, when there is a complete set of perfectly competitive markets, including those for contingent commodities, it does not matter whether capital hires labour or labour hires capital. This indeterminacy denies any significance to the question of who actually organises production. Moreover, there is no room for diversity of contracts. For prices convey all relevant information and individuals can buy or sell as much of each contingent commodity as they please, taking prices as parametrically given.


Moral Hazard Insurance Market Credit Market Enforcement Cost Draft Animal 
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© International Economic Association 1989

Authors and Affiliations

  • Clive Bell

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