Bargaining and the Distribution of Returns in the Purchase of Technology by Developing Countries

The intellectual tradition of most niodern economists (at least in the "Western" world) is such that they explicitly or implicitly associate the allocation of resources and distribution of returns with the market mechanism and a price system. Aside of issues that arise with respect to the degree of "purity" and "perfection" of the market-price system (a subject that has long been discussed) economists who accept it implicitly assume, among other things, that (a) goods, services and factors of production are "individually owned" (by persons or f irais) and (b) the parties participating in an exchange are able to assess the values of the economic units transacted. The market within which technology is being commercialized violates both assumptions related to the price system, as it is traditionally defined. Consequently, technology commercialization can best be described through other mechanisms, and one that appears most appropriate is that of bargaining. Policy makers, therefore, who concentrate on the "price mechanism" (as taught to us by traditional economic theory) in order to maximize their country's interests when technology is being purchased are misorienting themselves completely.