2.11 Market Prices, Values, and Common Goods
An understanding of the perception of scarcity and abundance provides a strong
foundation to understanding supply, demand, and market outcomes as these
concepts relate to resource allocation and sustainability. To the extent that
consumers delegate responsibility for sustainable consumption to producers and
producers are focused solely on profit maximization increased understanding of
the responsibility inherent in consumption may provide a catalyst for increasing
sustainable production, consumption, and development. As holistic evaluation of
consumption is an assumed behavior of the rational economic agent, strengthening
the understanding of the role of consumption may be significant in enabling the
development of the rational economic agent.
Supply and demand reflect the amount that producers or suppliers of a good or
service are willing and able to sell at a particular price and the amount that
consumers of a good or service are willing and able to purchase at a particular
price, respectively. Though on the surface the concepts of supply and demand appear
simple the characteristics that determine the explicit willingness and ability can be
complex. The complications can arise as a result of differences in the preferences,
behaviors, cultural values, financial capacity, as well as resource access and availability to the production process as these relate to suppliers. For consumers or
demand, the complications can also be attributed to preferences, behaviors, cultural
values, financial capacity, and wealth perception, as well as the perception of value
and price, along with access and availability, of other substitute and complementary
goods. Where and how the supply and demand interact with each other define a
market. A market is comprised of a group of producers (supply) and consumers
(demand) for a specific good or service, who collectively, as part of their exchange
process, determine the market price or equilibrium price of a good or service.
Price is the natural outcome of the supply and demand relationship. It is indicative
of the value of a good based on a consumer’s assessment of the costs and benefits of
purchasing the good. As consumers become increasingly aware of the environmental
and social costs of production, the prevailing price may be corrected either through
regulatory imposition of the costs of externalities within the market mechanism or
via consumers, who will opt to purchase goods not on price but related to holistic
production costs.
It is important to note that the market relationship is dependent on information
and understanding of the limits of duty of care. The outcome of the market relationship, price and quantity, can only reflect the embedded preferences and cultural
values depicted in demand and supply. If the market outcome does not meet
expectations, the market model is not to blame; rather the prevailing value structure
may be the flaw.
Value in this context is related to how resources are valued from the perspective
of the quality of care and maintenance we would be willing and able to provide to
ensure the protection of the resource. The use of the word “value” is not directly
based on market quantification but expresses the hierarchical importance that
2 The Role of Culture and Moral Responsibility in Facilitating a Sustainable. . .
29
An understanding of the perception of scarcity and abundance provides a strong
foundation to understanding supply, demand, and market outcomes as these
concepts relate to resource allocation and sustainability. To the extent that
consumers delegate responsibility for sustainable consumption to producers and
producers are focused solely on profit maximization increased understanding of
the responsibility inherent in consumption may provide a catalyst for increasing
sustainable production, consumption, and development. As holistic evaluation of
consumption is an assumed behavior of the rational economic agent, strengthening
the understanding of the role of consumption may be significant in enabling the
development of the rational economic agent.
Supply and demand reflect the amount that producers or suppliers of a good or
service are willing and able to sell at a particular price and the amount that
consumers of a good or service are willing and able to purchase at a particular
price, respectively. Though on the surface the concepts of supply and demand appear
simple the characteristics that determine the explicit willingness and ability can be
complex. The complications can arise as a result of differences in the preferences,
behaviors, cultural values, financial capacity, as well as resource access and availability to the production process as these relate to suppliers. For consumers or
demand, the complications can also be attributed to preferences, behaviors, cultural
values, financial capacity, and wealth perception, as well as the perception of value
and price, along with access and availability, of other substitute and complementary
goods. Where and how the supply and demand interact with each other define a
market. A market is comprised of a group of producers (supply) and consumers
(demand) for a specific good or service, who collectively, as part of their exchange
process, determine the market price or equilibrium price of a good or service.
Price is the natural outcome of the supply and demand relationship. It is indicative
of the value of a good based on a consumer’s assessment of the costs and benefits of
purchasing the good. As consumers become increasingly aware of the environmental
and social costs of production, the prevailing price may be corrected either through
regulatory imposition of the costs of externalities within the market mechanism or
via consumers, who will opt to purchase goods not on price but related to holistic
production costs.
It is important to note that the market relationship is dependent on information
and understanding of the limits of duty of care. The outcome of the market relationship, price and quantity, can only reflect the embedded preferences and cultural
values depicted in demand and supply. If the market outcome does not meet
expectations, the market model is not to blame; rather the prevailing value structure
may be the flaw.
Value in this context is related to how resources are valued from the perspective
of the quality of care and maintenance we would be willing and able to provide to
ensure the protection of the resource. The use of the word “value” is not directly
based on market quantification but expresses the hierarchical importance that
2 The Role of Culture and Moral Responsibility in Facilitating a Sustainable. . .
29