Value theory, therefore, studies the structure of these decisions, analyzes the influence of prices, and examines the efficiency of the resulting allocation of resources. Value theory is also applied by business firms and government agencies in their decisions that relate to pricing and the allocation of resources.
Capitalism: The Concise Encyclopedia of Economics | Library of Economics and Liberty - 0 views
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Clearly, these assumptions were at odds with both common sense and the reality of market conditions. Under real competition, which is what capitalism delivered, companies are rivals for sales and profits. This rivalry leads them to innovate in product design and performance, to introduce cost-cutting technology, and to use packaging to make products more attractive or convenient for customers. Unbridled rivalry encourages companies to offer assurances of security to imperfectly informed consumers, by means such as money-back guarantees or product warranties and by building customer loyalty through investing in their brand names and reputations (see advertising, brand names, and consumer protection).
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. Neither rivalry nor product differentiation occurs under perfect competition, but they happen constantly under real flesh-and-blood capitalism.
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Small-scale producers denounced these innovators as “robber barons,” accused them of monopolistic practices, and appealed to Congress for relief from relentless competition. Beginning with the Sherman Act (1890), Congress enacted antitrust laws that were often used to suppress cost cutting and price slashing, based on acceptance of the idea that an economy of numerous small-scale firms was superior to one dominated by a few large, highly efficient companies operating in national markets (see antitrust).
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