power

Power is a structure. Power in >networks results from one actor having a >capacity which is valuable for another actor, and which allows her to control a part of the >actions of this actor. In economic terms, the exercise of power can be regarded as a negative >externality of one actor's action on another actors >capacity which the latter cannot counteract, either because of lack of capacity or because of a lack of awareness.

In non-integral networks, power is an omnipresent phenomenon because every actor has the capacity to control some of the actions of other actors by means of changing the network structure. Furthermore, power is omnipresent because many >institutions presuppose their structural stabilization through sanctions. This is also the main reason why in the context of >group selection power can give rise to positive externalities in the group, if, for example, it contributes the the public good of maintaining beneficial institutions. Whether structures of power are viable in time or not depends on the relation between negative and positive externalities as defined above and is contingent on the factors that influence the evolution of >group selection.

In economic systems, this ubiquity of power implies that >competition is always competition for performance and for power, which analytically is the same as the darwinian dichotomy of natural selection and sexual selection. Competition for power is frequency-dependent selection, such that there is no necessary attainment of global optima and no way to simultaneously increase the position of all actors. Hence, the results of competition for power cannot be described by the Pareto-criterion which is so central for standard welfare economics. For practical matters of economic analysis, power is related to phenomena like status preferences in consumer behavior or status competition in product markets.

Basic References

In economics, considerations of power and status appear to be peripheral. A systematic approach to status preferences has been developed by
Frank, Robert H. (1985): Choosing the Right Pond. Human Behavior and the Quest for Status. New York/Oxford: Oxford University Press

The role of status in market competition is only analyzed by sociologists. The most influential is
Harrison White, Markets from Networks, Princeton University Press.

Power is a vast topic. As an example for the network approach to power, I recommend
Val Burris' site on power structure research

Semantic Field
order   structure
institution   power