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trade through markets from sale of one type of output for other, more highly valued goods. [ 7 ] Market incentives, such as reflected in prices of outputs and inputs, are theorized to attract factors of production , including labor, into activities according to comparative advantage , that is, for which they each have a low opportunity cost .
Duopolies can exist in various forms, such as Cournot, Bertrand, or Stackelberg competition. These models demonstrate how firms in a duopoly can compete on output or price, depending on the assumptions made about firm behavior and market conditions. Similar features are discernible in national political systems of party duopoly.
Oligopolies are another form of imperfect competition market structures. An oligopoly is when a small number of firms collude, either explicitly or tacitly, to restrict output and/or fix prices, in order to achieve above normal market returns. [13] Oligopolies can be made up of two or more firms.
The relationship between economic incentives and outcomes may be indirect: The economic incentives determine the agents’ experience, and these experiences may then drive future actions. Learning experiments can be classified as individual choice tasks or games, where games typically refer to strategic interactions of two or more players.
It has been suggested that two people may trade, but it takes at least three persons to have a market so that there is competition in at least one of its two sides. [12] However, competitive markets—as understood in formal economic theory—rely on much larger numbers of both buyers and sellers.
Because of the difference in the political systems in the U.S. and China, officials in each country pursue their objectives in different ways.
An incentive is a powerful tool to influence certain desired behaviors or action often adopted by governments and businesses. [4] Incentives can be broadly broken down into two categories: intrinsic incentives and extrinsic incentives. [5]
Oligopsony, a market where many sellers can be present but meet only a few buyers. Example: Cocoa producers; Cournot quantity competition, one of the first models of oligopoly markets was developed by Augustin Cournot in 1835. In Cournot’s model, there are two firms and each firm selects a quantity to produce, and the resulting total output ...