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.
186 questions
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What are the consequences of Gorman's paper community preference fields?
In the book Underskud from 2024, Emma Holten claims that [G53] shows that "no mathematically elegant proof exists that markets distribute and set prices in an optimal way" (my translation). ...
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Why did Mankiw write "for all types of firms" instead of "for competitive firms"? ("Principles of Economics 9th Edition" by N. Gregory Mankiw.)
I am reading "Principles of Economics 9th Edition" by N. Gregory Mankiw.
A competitive market, sometimes called a perfectly competitive market, has two
characteristics:
There are many ...
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In the real world, who raises the price in a free market?
If I have a market for smartphones let's say and demand for this good increases then this would create a shortage ceteris paribus and as a response the price would rise, right? But who actually raises ...
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Why is price gouging better than emergency rationing for essential goods and services during disasters?
A recent opinion piece in the Wall Street defended 'price gouging'- charging excessively high prices for essential goods in a disaster zone.
In this video, the example used is of a hurricane hitting a ...
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Why do economists deliberately conflate willingness and ability to pay in the context of price signals and price gouging?
Economists tend to disagree with price gouging legislation, because they agree with price gouging and posit that it ensures the most "efficient" distribution of resources during a crisis.
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If markets clear, then why do millions of people starve to death every year even though enough food to feed the world is produced every year?
We produce enough food to feed 10 billion people, yet millions starve to death every year.
Shouldn't prices come down such that the excess food supply can be sold to the poor or given away nearly for ...
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How are markets efficient at allocating resources for maximal social utility if they only give resources to the highest bidder?
One of the standard doctrines of market-based economics is that a market allocates resources to where they are most valued, which makes very little sense in the context of income inequality.
The ...
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Perfectly functioning credit markets and consumer saving
Today in my Macroeconomics lecture, while covering the Real Intertemporal Model with Investment (Chapter 11 of Williamson's Macroeconomics), my professor proponed that a key assumption to not make ...
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When do the curves touch the axes and when don't they?
The Demand Curve
The Supply Curve
Monopoly: How to Graph It
In videos (1) and (2), we see that the supply and demand curves do not touch the axes.
In (3), we see that the demand curve touches the Y-...
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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-...
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Why does Metro (AG) not allow everyone to shop there?
Why does the Metro wholesale allow to shop only for business persons and not to everyone? Do they have some limitations from anyone and why? They will make more money if everyone could shop there.
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Till what point do firms enter a market?
Hal Varian states that for a firm to enter an industry, the condition should be such that the price that the firm is charging is slightly above (p') the market price (p*) in a perfectly competitive ...
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Net Surplus and first party products calculation on digital platform
I was reading the book "The Economics of Platforms: Concepts and Strategy" by Paul Belleflamme and I was confused about the solution of the seller and buyer surplus equation on page 132. The ...
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What is the relationship between Adam Smith's theorem on the division of labor being limited by the extent of the market and his pin factory example?
What is the relationship between Adam Smith's theorem on the division of labor being limited by the extent of the market and his pin factory example? Are they each touching upon a different aspect of ...
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Putative Value of Niche Units of Measure (Natural Gas)
In the State of Connecticut (for example, this happens elsewhere as well) Natural Gas is denominated in Cubic Feet (ccf, actually, which is Hundred Cubic Feet). The US EIA also reports natural gas ...
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Technological contributions of Economics
Physics has led to technological inventions like rockets, television sets, motor cars etc. Medical science has led to the invention of numerous medicinal drugs. Computer science has led to the ...
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Can anyone explain the relationship between the seven deadly sins and derivative market
So, my teacher ask me to explain clearly why, how, what derivative tool,. affect to the rise and fall (add charts, data,..) of these events:
-The Enron crisis for Greed
-Nick leeson's gambling for ...
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How are research study results on marketing psychology generally interpreted?
I'm getting into marketing. I've been reading books, articles and even research papers on the topic. I'm confused about how to actually interpret information and research study results in this field.
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Why does the Rocket Internet purposefully abandon the market of China?
I am studying a very interesting entrepreneurial case: Rocket Internet, and one thing that confuses me is that they do business outside the U.S.A. and China.
“We identify and build proven Internet ...
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Why do accumulating ETFs grow linearly instead of exponentially?
I am learning about investments and I often read that accumulating ETFs re-invest the dividends by buying more stocks of the underling assets. The advantage of this is that by doing so they take ...
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Finding the market portfolio in a two-asset market under CAPM
I'm working on an unassessed course problem,
Consider a market with risk-free return $5\%$ and two risky investment $A$ and $B$. We are given the following data: \begin{matrix}
\text{Investment} &...
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Why Hanson's logarithmic scoring rule define an Automated Market Maker?
Why Hanson's logarithmic scoring rule define an Automated Market Maker?
We have in this paper
in page 47, section automated market maker, that this scoring rule can "easily" be turned into ...
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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?
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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 ...
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How can the abuses of monopoly power lead to market failure?
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 monopolies face a lack of competition, they have no incentive to improve ...
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Is there any evidence for tragedy of the commons or is it all actually the tragedy of private ownership?
The tragedy of the commons is sold as the idea that common property is over used, and thus arguments are made that there should be regulations over the commons, or it should be owned privately, ...
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Competitive Equilibrium how to determine subject to functions
Consider a 1-commodity, 2-consumers, 2-periods economy with
S = 2, J = 1. The asset pays one unit (of the commodity) in state 1 and 2
units in state 2. q denotes the price of the asset at time 0. The ...
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Can a business's search for profits be considered as movement in state space?
When businesses make decisions to increase profits, they have to adjust several "parameters" of the business such as quantity to output, pricing, choosing a production mix, brand positioning,...
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What are the consequences of the invisible hand?
I am currently reading The Wealth of Nations, and it is noticeable that the concept of the "invisible hand" appears only once in the whole book, and where it does appear, there is little in ...
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Do banks influence each other's decisions to issue bonds, via a dependency graph?
This questions is about how to model the growth of a bond market. Consider a large set of banks, such as HSBC, BNP Paribas, etc, that can enter into syndication (i.e. join together in small groups) to ...
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Profit Maximizing with a competitive fringe
I have this question:
Your business is the dominant firm but there exists a competitive fringe.
The competitive fringe produces with total cost: $\; c_𝑓(q_f) = 3𝑞_f$.
There have also been some ...
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Austrian vs Neoclassical arguments for a market economy
I read through this article, and the phrase "least-worst alternative" sparked a train of thought, which I would like some insights on.
To me, it seems like one of the key differences between ...
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Optimization Model for Market Clearing using Uniform Pricing
Dear all, can someone please share a simple example for market clearing via Uniform Pricing using an Optimization Model?
I am trying to simulate a market using bid values with quantity and price, from ...
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What is the best survey or analysis of products or services in demand in an economy at the moment?
Is there a thinktank, survey or publication that is considered a gold standard in analyzing what jobs, skills, services, commodities, or resources are or would be most in demand in a given economy, ...
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Why does Taiwan dominate the semiconductors market?
The recent visit of US politician Nancy Pelosi to Taiwan generated a lot of news about the dependence the world has on Taiwan, given its dominance of the semiconductor market.
But I couldn't find ...
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Monopoly markets
A monopoly can produce any output level at a constant marginal (and average) cost of θ per unit. Assume the monopoly sells its goods in two markets separated by some distance.
The demand curve in the ...
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Economic Recession
Recession is expected to hit the world, according to recent news reports. I wanted to know why the recession is approaching because I'm new to this area. What are the main elements causing it?
Even ...
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Can a supermarket be viewed as a marketmaker (like market makers that operate on the financial markets)?
Marketmakers are traders who set the price on a financial market, because they have an obligation to buy.
Can a supermarket be viewed as a marketmaker (like market makers that operate on the financial ...
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Violation of the zero-profit condition
Suppose a perfectly competitive firm has cost function $C(q) = 40 + 0.5q + 0.05q^2$. If the market price is $p = 8$, the profit made is maximized at $MR = MC \implies 8 = 0.5 + 0.1q \implies q^{*} = ...
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Understanding Vernon Smith's 1962 "An Experimental Study of Competitive Market Behavior"
Vernon Smith's 1962 paper "An Experimental Study of Competitive Market Behavior" simulates a market using students (who have piece of paper giving their reservation prices). In one of the ...
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How can we explain quantity competition and price taking?
Note: This is a question on the didactics of microeconomics, directed to those of you who have some experience teaching this subject.
When I studied the basic principles of microeconomics, a price-...
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Perfect competition allocations
Suppose the market demand is $P(Q) = \alpha - \beta(Q)$ where $Q = \sum q_1$. Variable $q_i$ denotes the output of the $i$th firm and $Q$ is the total output. The marginal cost for each firm is $c$.
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Why is the spot price of electricity determined by the highest price that gets offered? Can't they scale it according to the actually offered prices?
most energy markets work using "spot markets", where everyone puts in an offer for how much electricity they can provide and at what price, and then everyone gets paid the highest price ...
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Why doesn't stock market help to boost the economic growth directly?
For example, during the recession, the central bank often goes to buy financial instruments that are riskier than government bonds (such as corporate bonds)- which is called "quantitative easing&...
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How are stock prices determined in the following cases?
I looked at this question already. I know there is an order book with bid and ask and that the price is updated when a match occurs. But I have two questions:
What happens when the bid is higher than ...
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Impact of contractionary monetary policy and IS-LM curve shifts
Using the IS-LM diagram, show the impact of a contractionary monetary policy for a country when:
(a) it does not affect expectations about future interest rates and output
(b) it affects expectations ...
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Does a free market economy sustain a greater variety of business models in any given industry?
I have a mere hunch that in a free market economy, a greater variety of business models can be supported or sustained in each industry, when compared to a more centrally planned economy. However, I ...
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Literature recommendation on market microstructure (real estate, car, etc.)
I am very interested in secondary-market-related research topics. Especially, from the micro-level, e.g., starting from the utility function of consumers. I want to understand how to model rational ...
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Why is South Korea classified as an Emerging Market economy?
I have recently found out that South Korea is part of the MSCI Emerging Markets Index, and that the South Korean Won (KRW) currency trades as a non-deliverable currency. Furthermore, the South Korean ...
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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?
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