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Questions tagged [markets]

A market is an institutional arrangement in which buyers and sellers exchange goods, services, or information in transactions with or without money.

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11
votes
3answers
364 views

Can econometrics test for correlation or causality between prices and corruption?

This week there was news that some prices are rising. I heard that in some countries where corruption is high the prices are also higher. I wonder if there is causaility or just both at same. It would ...
11
votes
5answers
401 views

Why isn't the cost of shoes affected by their size?

I have noticed that many shoe selling shops I have visited have the same price tag regardless of the shoe size. Intuitively I'd think the bigger the shoe the more material and consequently capital ...
7
votes
4answers
3k views

Is market failure constant? What properly defines it?

My textbook defines market failure as when "the production or consumption of a good or service causes additional positive or negative externalities on a third party not involved in the economic ...
7
votes
1answer
1k views

Benefits of a cartel among firms

Suppose I have $n>2$ firms selling differentiated products. These firms form a cartel for the price. The cartel has size $n_c$. Let $\pi_{i,m}$ be the payoff of a firm $i$ outside the cartel and $\...
6
votes
3answers
162 views

When to use the market and when to use central planning?

I have a basic question: my understanding is that in a market economy, economic decisions are governed by prices, i.e prices signal what should be produced & how much. This is opposed to central ...
5
votes
1answer
49 views

Are stock exchanges market makers?

Are stock exchanges like NASDAQ and NYSE market makers? In other words, are they providing liquidity by pairing individual buyers and sellers with each other in real-time? Or does it work differently?
5
votes
1answer
201 views

If Germany is the largest exporter, why do Chinese products pervade the the US market?

Despite Germany being the third larger exporter in the world, I have not once seen German products on online retail sites such as Amazon.com, NewEgg, BestBuy, or any retailer in the US really. Why is ...
5
votes
0answers
81 views

Auction mechanism with no trusted third-party

I have been using a double-auction mechanism to solve a two-sided market where multiple agents are competing to supply/use slices of a shared resource. The owner of the resource is a trustable third-...
5
votes
0answers
26 views

Why do co-ops dominate in certain markets rather than more-conventional enterprises?

Why do co-ops dominate in certain markets rather than more-conventional enterprises? For example, the US dairy processing market seems to be dominated co-ops like Land'O Lakes and Dairy Farmers of ...
4
votes
2answers
304 views

“For a market to exist there must be scarcity” (T/F)

The answer provided was 'true', that scarcity was necessary in the existence of a market. But isn't that not always true? For example, there's a market for canned air, and air is most definitely not ...
4
votes
2answers
10k views

How can the abuses of monopoly power lead to market failure?

So I know that the abuses of monopoly power can cause market failure, but I don't know why that is. I am guessing that because monopoly's face a lack of competition, they have no incentive to improve ...
4
votes
2answers
691 views

What are the most recent devopments with applying fractals to economics?

I was researching fractals for my senior mathematics presentation and discovered that one of the most recent pioneers in that section of the field was able to apply fractal mathematics to the field of ...
4
votes
3answers
5k views

Why is the Market-Clearing Price also an Equilibrium Price?

When the price is such that supply equals demand for e.g. bicycles, everybody who wants to buy a bike at that price gets one, and every bike gets sold. Everybody goes home happy and the marketplace ...
4
votes
1answer
36 views

Prediction market based on LMSR: Sell, or buy other side?

Consider a prediction market with two outcomes (Yes and No) and a scoring rule based on Hansons’s LMSR, i.e. ln(ea+eb), where a and b are the number of Yes resp. No shares sold. Assume that I have ...
4
votes
1answer
708 views

Why is food less expensive in India than the United States?

India has 4x the population, less land, and far worse technology and infrastructure than the United States. Shouldn't food cost in the US be less expensive? I've never been to India, but it seems like ...
4
votes
1answer
59 views

Is there any historical example that a market is shrinking down after competition?

I was told that the advertising market as a whole shrank after Google became part of the marketing industry. Apparently, the decrease occurred in offline markets as well as online markets. Is this a ...
3
votes
3answers
383 views

Why does Venezuela have such a high Big Mac Index?

Venezuela is ranked #2 in the 2014 Big Mac Index at \$7.15 per Big Mac. You can see the graph here. However, Venezuela is not a very rich country, having a gross domestic product of \$11,789 per ...
3
votes
1answer
785 views

Why do externalities lead to a Pareto-inefficient outcome?

So we know that under a Pareto-inefficient outcome, there is room for Pareto improvement, i.e. making someone better off without hurting anyone. Assume that there is a drug company which is in ...
3
votes
2answers
279 views

What would happen if stock markets were open 24 hours?

Suppose you are a broker or a trader, and the stock markets will be open 24 hours a day. What would be the implication for you as a broker in this scenario? I mean: How will your strategies change? ...
3
votes
1answer
60 views

Understanding agents selecting among markets

Let's say an entrepreneur can choose between starting a business in a competitive market with zero economic profit, and starting a business in a market that is not perfectly competitive with positive ...
3
votes
1answer
98 views

Episodes of Housing Crashes and Never Recovering

Looking at many housing markets in major cities around the world today it looks like most (London, New York, Sydney, Beijing, Toronto,...) have become totally detached from the earnings of the local ...
3
votes
2answers
2k views

Are market structures on a spectrum?

So I understand that each market structure has their own characteristics, and that for instance Perfect Competition involves high competition, and I believe Monopolistic competition slightly less so, ...
3
votes
0answers
95 views

Europe not self-sufficient in terms of food requirements and consumption?

An acquaintance once told me that Europe is not self-sufficient in terms of food consumption as it does not have enough farmland and farmers to produce enough for all its people, especially in terms ...
3
votes
0answers
142 views

With OPEC driving the prices of oil down, can American producers simply store oil produced at higher cost to sell later? [closed]

I have been wondering. With OPEC driving down the price of oil in order to stifle the growth of the American oil industry, what can we do about it? More specifically, why don't these oil producers ...
2
votes
1answer
44 views

Access to the markets for a country

What does it mean for a country to have access to the markets. E.g: There is an ongoing discussion when Greece will follow a prosperity path in order to enter again the "markets".
2
votes
2answers
108 views

What are the assumptions behind calculating the market equilibrium from supply and demand curves?

Imagine that there are 5 buyers (B1,...,B5) with maximum willingness to pay as follows: B1 = $5 B2 = $4 B3 = $3 B4 = $2 B5 = $1 Imagine that there are 5 sellers (...
2
votes
1answer
1k views

Stock vs flow variables

How could I decide from a variable exactly, that is stock or flow type? Variables, which are measured at a point of time are ...
2
votes
2answers
192 views

It's unclear how market equilibrium is reached in case of overproduction

Let's assume that there is disequilibrium, namely that $P=P_2$, thus $Q_s > Q_d$. In other words, there is overproduction. This is perfectly competitive market, so competition between producers ...
2
votes
2answers
4k views

Is the marginal cost the same for every firm in a perfectly competitive market?

Spin-off from: market equilibrium quantity $\ne$ firm profit maximising quantity? Consider a perfectly competitive market with equilibrium price $P_{eq}$ and quantity $Q_{eq}$ and firm with profit ...
2
votes
1answer
667 views

Where can I find statistics for numbers of 16-20 year olds in the world?

Where can I find statistics about how many 16-20 years old people do live in the world? If there is no such statistics, how about people in this age-range in europe+amerika?
2
votes
1answer
140 views

When to prefer maximisation of surplus and when instead to prefer minimising differences in price and q to find market equilibrium?

Two alternative approaches to compute a market equilibrium (in static analysis) are either to minimize the differences (either using abs() or a quadratic diff) between supply-demand quantities and ...
2
votes
1answer
552 views

Under what conditions does market failure occur?

Edit: Is it possible to broadly categorize the ways in which market failures occur into relatively few categories? If so, what are they?
2
votes
1answer
24 views

Setting prices in mobile telephony

Can someone please explain or provide some useful link on factors affecting setting prices of mobile telephony services?
2
votes
0answers
44 views

Demonstrating that markets yield productive and allocative efficiency to introductory students

Has anybody come across a nice, intuitive (i.e. neither formal nor technical) way to demonstrate how markets yield both productive and allocative efficiency? I suppose the allocative argument ...
2
votes
0answers
153 views

Fundamental Theorem of Asset Pricing (Linear Algebra)

I saw this question in a textbook that I was recently reading and don't really know how to aprpoach this problem. Let $H$ be a finite dimensional vector space with inner product ($\cdotp$, $\cdotp$)....
2
votes
0answers
88 views

Did I do something wrong in calculating the market equilibrium?

Sorry for asking such a silly question, but something seems odd about my answer to this question: Suppose that two consumers, Jeff and Walt, are the only consumers in the market for carrots. Jeff’...
2
votes
0answers
29 views

Understanding Options Quotes

Below is a picture of today's Rough Rice Options Quote. I would like to understand how to interpret the information in the table below. Firstly, with regards to the future contract we see that it ...
2
votes
0answers
77 views

What topics are important to analyse a financial product? [closed]

When reading analysis papers of financial product, derivative or stock, tangible or not, I noticed that a lot of those papers seem to have similar structures. This got me to the question if there ...
2
votes
0answers
93 views

residential property shares trading (similar to REIT)

This year in the UK a residential property crowdfunding platform propertypartner.co went live and I would like to understand it from economic point of view. The idea is that a flat/house is purchased ...
2
votes
0answers
53 views

Capital asset pricing model (CAPM) applied to countries

I'm struggling on trying to find a beta for an equially wighted profolio for three countries (A, B,C). All the data I'm given are montlhy retunrs of each countrys ...
2
votes
0answers
70 views

Decreasing consumption prices and increasing housing prices

It's election time in my country. The government boasts a decrease of 5% in consumption prices thanks to removing regulations, while the opposition blames the government for an increase of 5% in ...
1
vote
1answer
45 views

Is it possible to sell a rival and non-excludable product?

The context pertaining to which I have asked this question is same as that of the question linked below Rival and non excludable products In the linked question, a few examples of rival and non-...
1
vote
2answers
492 views

Why currency purchasing power is linked to confidence in central banks

From the New Statesman, http://www.newstatesman.com/politics/economy/2016/02/coming-storm, "Ever since the collapse of the Bretton Woods system of pegged exchange rates in 1971, the sole guarantee ...
1
vote
2answers
2k views

What is the difference between 'actual' and 'potential' interaction between buyers and sellers?

In the book "Microeconomics" by Pyndyck and others, the author(s) define a 'market' as a collection of buyers and sellers, who by the actual or potential interaction with each other determine the ...
1
vote
1answer
36 views

Vegetarians vs shoppers of humane meat/eggs/dairy - Who has the biggest impact on the factory farming meat industry?

I apologize for not being able to word this in a non subject specific way. So, for people who don't support widespread factory farming practices, there are people that abstain from meat completely, ...
1
vote
1answer
160 views

Difference between LMSR and Liquidity-Sensitive LMSR

What is the difference between the LMSR (logarithmic market scoring rule) and the Liquidity-Sensitive LMSR (LS-LMSR) and what would cause prediction markets like Augur to focus on the later model?
1
vote
1answer
293 views

market equilibrium quantity $\ne$ firm profit maximising quantity?

Consider a perfectly competitive market with equilibrium price $P_{eq}$ and quantity $Q_{eq}$ and firm with profit maximising quantity $Q_f$ as illustrated below: I guess any firm in the market would ...
1
vote
1answer
55 views

What are the implication of state-run oil production vs. private production from leases?

I'm not any kind of expert in this area, so please be gentle. It seems that we speak of oil (and other natural resources) as though control of output and revenue from extraction adheres to the ...
1
vote
1answer
114 views

Will the goods market be in equilbrium along the AD curve?

This is a question which was asked in the entrance to Jawaharlal Nehru University's (New Delhi) entrance for their post-grad program specializing in International Economics in 2014. Which of the ...
1
vote
1answer
82 views

How do I distinguish price-taking in perfect competition from monopsony?

I'm working on a practice problem where I'm giving the following: Suppose a firm is a price-taker and can sell the good it produces at price $p$. There is more to the problem, but it is not ...