Recessions as coordination failure In recessions,output is low,workers are unemployed,and factories sit idle. If all firms and workers would reduce their prices, then economy would return to full employment. But,no individual firm or worker would be willing to cut his price without knowing that others will cut their prices.Hence,prices remain high and the recession continues. • Recessions as coordination failure • In recessions, output is low, workers are unemployed, and factories sit idle. • If all firms and workers would reduce their prices, then economy would return to full employment. • But, no individual firm or worker would be willing to cut his price without knowing that others will cut their prices. Hence, prices remain high and the recession continues