The Theory of Competitive Markets

2021 ◽  
pp. 15-22
Author(s):  
John N. Drobak
Keyword(s):  
Resource Allocation ◽  
Economic Analysis ◽  
Real World ◽  
Government Regulation ◽  
Consumer Preferences ◽  
Economic Education ◽  
Competitive Markets ◽  
Consumer Sovereignty ◽  
World Markets ◽  
Necessary Constraints

Chapter 2 explains how the theory of competitive markets became the benchmark for economic analysis, implicitly leading to the assumption that firms actually compete in real-world markets rather than acting as oligopolies. The chapter begins by showing how competition theoretically maximizes resource allocation and constrains the behavior of firms. Then it analyzes the assumptions that underlie the theory, emphasizing the problems that stem from the assumption of consumer sovereignty and the ability of producers to manipulate consumer preferences. It also explains how the assumption that markets are competitive became the paradigm of economic education, as advocated by Alfred Marshall, rather than recognizing the prevalence of monopolies and oligopolies, as advocated by Marshall’s successor, Joan Robinson. Finally, the chapter shows how the assumption that real-world markets are competitive is used to justify opposition to government regulation, based on the notion that competition already provides the only necessary constraints.

Coase, Ronald H. (1910–)

2018 ◽  
Author(s):  
Brian H. Bix
Keyword(s):  
Economic Theory ◽  
Industrial Organization ◽  
Economic Analysis ◽  
Transaction Costs ◽  
Government Policy ◽  
Real World ◽  
Government Regulation ◽  
Law And Economics ◽  
Economic Analysis Of Law ◽  
Economic Thinking

Coase’s work reshaped the economic analysis of law and government policy, and began the law-and-economics movement. His writings, over the course of decades, have consistently emphasized the importance to clear economic thinking of observing actual practice. While economic theory had often been grounded on abstract models that assumed the absence of any costs for commercial transactions, Coase has shown how recognizing the pervasive presence of frequently substantial transaction costs in the real world requires rethinking established economic ideas about industrial organization and government regulation.

Making Behavioralism Work

2017 ◽  
Author(s):  
Adrian Kuenzler
Keyword(s):  
Intellectual Property ◽  
Consumer Preferences ◽  
Psychological Research ◽  
Revealed Preferences ◽  
Consumer Sovereignty ◽  
Bright Line ◽  
Production And Distribution ◽  
External Incentives ◽  
The Universe

This chapter turns to the restoration of consumer sovereignty. It revisits the three recurrent principles set out in Chapter 1 and argues that antitrust and intellectual property laws must understand consumers in their full socially embedded complexity to promote progress. Only in this way can analysts respect, rather than suppress, consumer preferences that evince concern for less proprietary forms of production and distribution in a marketplace which is heavily fixated on consumerism and passive consumption. It points to a number of ingenious recent studies from the cognitive psychological research that demonstrate that revealed preferences and external incentives have been offered as bright line rules for directing the consumer’s attention primarily (and exclusively) to conventional manufacturing and distribution techniques, but that such physical and economic processes scarcely exhaust the universe of choices about which consumers express strong interest.

scholarly journals Designing Random Allocation Mechanisms: Theory and Applications

2013 ◽  
Vol 103 (2) ◽  
pp. 585-623 ◽  
Author(s):  
Eric Budish ◽  
Yeon-Koo Che ◽  
Fuhito Kojima ◽  
Paul Milgrom
Keyword(s):  
Resource Allocation ◽  
School Choice ◽  
Real World ◽  
Random Allocation ◽  
Assignment Problems ◽  
Matching Problems ◽  
House Allocation ◽  
Controlled Choice ◽  
Ex Post ◽  
Ex Ante

Randomization is commonplace in everyday resource allocation. We generalize the theory of randomized assignment to accommodate multi-unit allocations and various real-world constraints, such as group-specific quotas (“controlled choice”) in school choice and house allocation, and scheduling and curriculum constraints in course allocation. We develop new mechanisms that are ex ante efficient and fair in these environments, and that incorporate certain non-additive substitutable preferences. We also develop a “utility guarantee” technique that limits ex post unfairness in random allocations, supplementing the ex ante fairness promoted by randomization. This can be applied to multi-unit assignment problems and certain two-sided matching problems. (JEL C78, D82)

Real Bills, The Gold Standard, and Central Bank Policy

1976 ◽  
Vol 50 (4) ◽  
pp. 503-513 ◽  
Author(s):  
Robert Craig West
Keyword(s):  
Central Bank ◽  
Discount Rate ◽  
Real World ◽  
Federal Reserve ◽  
Economic Activity ◽  
Gold Standard ◽  
Government Regulation ◽  
International Exchange ◽  
The Real ◽  
The Past

Students of the origins and accomplishments of government regulation of economic activity have open suspected that the laws on which regulation is based were addressed to problems and conditions of the past that no longer prevailed, or — what is worse — assumptions about the “real world” that are highly unrealistic. This is Professor West's main conclusion about the Federal Reserve Act of 1913, especially as regards its discount rate and international exchange policies.

Remembering Peter Christoffersen (1967–2018)

2018 ◽  
Keyword(s):  
Real World ◽  
Theoretical Background ◽  
Early Age ◽  
World Markets

Peter Christoffersen passed away on June 22, 2018 at an early age. He was one of the most prolific and gifted researchers in the area of derivatives, combining a very strong theoretical background with an appreciation for the practical details of real world markets. He will be sorely missed. This memorial article provides a few general comments about his work and offers reminiscences about Peter as a researcher, a teacher, and a mentor from three of his coauthors and former students.

scholarly journals ’I learned a lot about my classmates …’. Exploring focus group discussions as learning environment to raise controversial issues in geography and economic education

2021 ◽  
Vol 12 (4) ◽  
pp. 16-30
Author(s):  
Christiane Hintermann ◽  
◽  
Heidrun Edlinger ◽  
Matthias Fasching ◽  
Thomas Jekel ◽  
...  
Keyword(s):  
Focus Group ◽  
Learning Environment ◽  
Focus Groups ◽  
Learning Environments ◽  
Real World ◽  
Economic Education ◽  
Controversial Issues ◽  
Active Citizenship ◽  
Focus Group Discussions ◽  
Group Discussions

Teachers of geography and economics address numerous topics in the classroom which are controversially discussed in society and/or affect pupils directly. How they deal with issues such as migration or identity depends not only on the respective curriculum but also on their disciplinary knowledge and pedagogic skills. This paper argues for the need to adapt learning environments depending on educational objectives, content, age and discusses focus groups as one possible way to work with students in secondary education on sensitive matters. Focus groups are seen as a tool to enable real-world complexity in the classroom, and to prepare students for participatory, active citizenship. The paper first discusses current theoretical thought regarding controversy in both society and the classroom. It then goes on to illustrate real-world classroom experiences of focus-group based learning on controversial issues and to discuss its benefits and challenges.

Extreme Events Theory and Application

2017 ◽  
pp. 83-115
Keyword(s):  
Extreme Events ◽  
Real World ◽  
Extreme Event ◽  
Investment Strategy ◽  
The Other ◽  
Price Inflation ◽  
Statistical Software ◽  
Tail Risk ◽  
Inflation Risk ◽  
World Markets

In standard statistical methodologies, the probability that the extreme event will occur is very small. But the expected losses in real world markets are higher and sometimes with catastrophic outcomes. Here it seems that the fact that we could lose a certain amount of money 95% or 99% of the time tells us absolutely nothing about what could happen the other 5 or even 1 percent of the time. For that reason, instead of estimating the certain loss, as the standard statistical methodologies account, we introduce a technique known as a “tail risk protecting strategy” or “the barbell investment strategy.” In this chapter, analyzing the copper market movements I understand that the market has been conditioned to believe that the copper demand will exceed its supply. Therefore, I suggest to protect against a growing price-inflation risk. The analyses are conducted using the statistical software STATA 11 and Excel Spreadsheets.

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