Markets and Nonmarket Environments Essay

1542 Words Feb 15th, 2011 7 Pages
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.
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The nonmarket environment is characterized by four I’s
1. Issues
2. Interests
3. Institutions
4. Information

1. Issues are the basic unit of analysis and the focus of nonmarket action.

2. Interests include the individuals and groups with preferences about, or a stake in, the issue. Interests include those who have an economic stake in an issue. Interests include special interest, activist, and advocacy groups and other nongovernmental organizations (NGOs).
The interests may be grouped as follows:
A. Organized Interests
a. Automakers
b. United Auto Makers
c. Insurance Industry
d. Trial Lawyers
e. Oil Industry
B. Unorganized Interests
a. Car buyers
b. Borrowers
c. Passengers
C. NGOs
a. Environmental Groups such as Sierra Club, Bluewater, Network, Rainforest Action Network
b. Center for Auto Safety
c. Consumer Federation of America
d. Union of Concerned Scientists.

3. Institutions include govt. entities such as legislatures and regulatory agencies as well as the news media and public sentiments.

The govt. legislatures, the executive branch, the judiciary, administrative agencies, regulatory agencies, and international organizations such as the World Trade Organization (WTO).

Or a) Legislatives
b) Administration and Regulation Agencies
c) Private Regulation
d) Judicial
e) International
f) Nongovernmental
g) Executive Branch

These institutions both make decisions and serve as arenas in which

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