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Pricing, quantity, and welfare effects of a binding price ceiling. There is a substantial body of research showing that under some circumstances price ceilings can, paradoxically, lead to higher prices. The leading explanation is that price ceilings serve to coordinate collusion among suppliers who would otherwise compete on price.
An ineffective, non-binding price floor, below equilibrium price. A price floor could be set below the free-market equilibrium price. In the first graph at right, the dashed green line represents a price floor set below the free-market price. In this case, the floor has no practical effect.
Deadweight loss can also be a measure of lost economic efficiency when the socially optimal quantity of a good or a service is not produced. Non-optimal production can be caused by monopoly pricing in the case of artificial scarcity, a positive or negative externality, a tax or subsidy, or a binding price ceiling or price floor such as a ...
When the two parties could agree on a binding contract covering the whole period of the investment and anticipating all possible outcomes and providing protection for both parties in every situation that may arise at the time the investment is made, the parties would have enough confidence to make the investment, and both parties could enjoy ...
Travel cost method is used to estimate the economic value of a recreation site [25] using the travel cost each individual incur to travel to a recreational site. [26] Costs include the opportunity costs of the time it takes to get to the site, transportation cost, accommodation costs, any parking fees, and so on.
Legal acts include regulations, which are automatically enforceable in all member states; directives, which typically become effective by transposition into national law; decisions on specific economic matters such as mergers or prices which are binding on the parties concerned, and non-binding recommendations and opinions.
Contingent valuation surveys were first proposed in theory by S.V. Ciriacy-Wantrup (1947) as a method for eliciting market valuation of a non-market good.The first practical application of the technique was in 1963 when Robert K. Davis used surveys to estimate the value hunters and tourists placed on a particular wilderness area.
Slack variables give an embedding of a polytope into the standard f-orthant, where is the number of constraints (facets of the polytope). This map is one-to-one (slack variables are uniquely determined) but not onto (not all combinations can be realized), and is expressed in terms of the constraints (linear functionals, covectors).