ABSTRACT
This chapter explores whether the economic principles of marginal analysis, appropriately adapted to social exchange, can help clarify the changes and adjustments of group structure that occur in the course of social interaction and social differentiation. Exchange processes proliferate from bilateral monopolies into wider circles not only as a result of the search for more profitable opportunities but also because of limitations of resources. The application of the principles to the exchange of advice for social status in work groups makes it possible to advance hypotheses concerning the changes and adjustments that occur in the social structure in response to varying conditions. Under conditions of inelastic demand, a decrease in the supply of advice is expected to intensify status differences and have comparatively little influence on, the volume of consultation. When a consultant is more and more frequently asked for advice by a colleague, the value of the respect and compliance he receives in return for his advice declines.
