factor market

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Factor Market

The market for the means of production. That is, the factor market is the buying and selling of land, labor and capital, as well as raw materials and entrepreneurship. The most important component of the factor market is labor. See also: Factor Income.

factor market

a market in which FACTORS OF PRODUCTION are bought and sold and in which the prices of labour and other FACTOR INPUTS are determined by the interplay of demand and supply forces. See LABOUR MARKET, CAPITAL MARKET, COMMODITY MARKET, DERIVED DEMAND, MARGINAL PHYSICAL PRODUCT, MARGINAL REVENUE PRODUCT, PRICE SYSTEM. factors of production the resources that are used by firms as FACTOR INPUTS in producing a good or service. There are three main groups of factor inputs: NATURAL RESOURCES, LABOUR and CAPITAL.

Factors of production can be combined together in different proportions to produce a given output (see PRODUCTION FUNCTION); it is assumed in the THEORY OF THE FIRM that firms will select that combination of inputs for any given level of output that minimizes the cost of producing that output (see COST FUNCTION). See ENTREPRENEUR, MOBILITY.

References in periodicals archive ?
"When economists list out structural constraints, they often mention factor markets, which are in the state list or the Concurrent List.
The liberation of factor markets from moral and communal oversight triggers an initial growth surge characterized by asset accumulation that enables market elites to gain political leverage, which they then use to shift terms of trade to their advantage.
Fourth, increasing the sector's productivity requires efficient factor markets - land, labour and capital - so that factors of production can move easily and at low cost from areas of low productivity to where they are most in demand.
While factor market rivalry obviously allows for the notion that competition exists between firms in similar industries producing or delivering similar goods or services, potentially more damaging is that competition across factor markets can also be present between firms in dissimilar industries or dissimilar product markets (Chen and Miller 2015).
Second, structural bottlenecks must urgently be addressed, through the streamlining of regulations, as well as reforms to promote competition in product markets and to increase the flexibility and efficiency of factor markets for labor, finance, and land.
As institutions and factor markets strongly contribute to countries' economic development and firms' market success (Hitt, Dacin, Levitas, Arregle & Borza, 2000; Hoskisson, Eden, Lau & Wright, 2000), we grounded our research in institutional theory (DiMaggio & Powell, 1983; Scott, 1995) and factor-market rivalry (FMR) theory (Ellram, Tate & Feitzinger, 2013; Markman, Gianiodis & Buchholtz, 2009).
The operation builds upon the government-led Big Results Now (BRN) initiative, and supports a set of horizontal policy interventions to improve the overall 'ease of doing business' and strengthen the factor markets (labor, land and capital).
Economic Development in Central Asia: Institutional Underpinnings of Factor Markets
It can affect factor markets through adjusting relative prices and demand in the factor market.
THIS WEEK'S X Factor markets were in a state of confusion last night as doubts persisted over whether Lucy Spraggan would be able to take part, writes Lucy Conquest.
This research also enriches current multi-market competition research by introducing the competition in factor markets.