Search results
Results From The WOW.Com Content Network
19th century economists John Stuart Mill and Henry Sidgwick are credited with founding the early concepts related to spillover effects. These ideas extend upon Adam Smith's famous ‘Invisible Hand’ theory which is a price that suggests prices can be naturally determined by the forces of supply and demand to form a market price and market quantity where buyers and sellers are willing to make ...
In economics, coordination failure is a concept that can explain recessions through the failure of firms and other price setters to coordinate. [1] In an economic system with multiple equilibria, coordination failure occurs when a group of firms could achieve a more desirable equilibrium but fail to because they do not coordinate their decision making. [2]
In welfare economics, the theory of the second best concerns the situation when one or more optimality conditions cannot be satisfied. [1] The economists Richard Lipsey and Kelvin Lancaster showed in 1956 that if one optimality condition in an economic model cannot be satisfied, it is possible that the next-best solution involves changing other variables away from the values that would ...
In economics, imperfect competition refers to a situation where the characteristics of an economic market do not fulfil all the necessary conditions of a perfectly competitive market. Imperfect competition causes market inefficiencies, resulting in market failure . [ 1 ]
Decisions based on economic theories that are not scientifically possible to test can give people a false sense of precision, and that could be misleading, leading to build up logical errors. Natural economics: Economics is concerned with both 'normal' and 'abnormal' economic conditions. In an objective scientific study one is not restricted by ...
Post-Keynesian economists are united in maintaining that Keynes' theory is seriously misrepresented by the two other principal Keynesian schools: neo-Keynesian economics, which was orthodox in the 1950s and 60s, and new Keynesian economics, which together with various strands of neoclassical economics has been dominant in mainstream ...
Demand-side failures include preference-revelation problems and the illogic of voting and collective behaviour. Supply-side failures largely result from principal–agent problem. [2] Government failure may arise in any of three ways the government can involve in an area of social and economic activity: provision, taxation or subsidy and ...
Headquarters of AIG, an insurance company rescued by the United States government during the subprime mortgage crisis "Too big to fail" (TBTF) is a theory in banking and finance that asserts that certain corporations, particularly financial institutions, are so large and so interconnected that their failure would be disastrous to the greater economic system, and therefore should be supported ...