ILRIC 635 Lecture 9 - ILRIC 635 Lecture 9 Mechanisms for...

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ILRIC 635 Lecture 9 Mechanisms for Addressing Labor Issues Core postulates: 1) Firms maximize profits (π) o Without a clear pathway to profit, private investors are not normally motivated to meet the needs of the poor Companies do sell things to poor people if it means high profit Protestors and consumers can force profit maximizing behavior to be more socially conscious o Profit (π) = Revenue (R) – Cost (C) Not maximize revenue and minimize cost (maximize difference) 2) Individuals maximize utility o Utility = f (goods, leisure) Model – catches the essence of reality so that we can all understand Free Market – let the market forces be, don’t intervene (as opposed to regulated markets) - Fields believes markets are powerful, but that non-intervention is illogical y 2 Fields: we should choose where we are on this frontier Laissez-Faire: let it be, wherever that may be y 1 o Sen: “free market can produce outcomes that are perfectly understandable and perfectly horrible”
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ILRIC 635 Lecture 9 - ILRIC 635 Lecture 9 Mechanisms for...

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