The game theory applied to the Covid-19 pandemic

The classification of COVID-19 as a pandemic by the World Health Organization (WHO), substantiated a global crisis in public and economic health, exposing failures of governments and markets in terms of the ability to act in a corrective, preventive and, above all, predictive manner, given the appearance of exogenous factors. One of the visible consequences of the pandemic is the polarization between Economy and Health in the countries, creating a competitive environment that resembles a duopoly where each player ends up acting and making their decisions according to what the other does. This article considers this scenario by quantitatively evaluating economic results that are possible to be achieved when in a negotiation essay between ‘Economics’ and ‘Health’, using the economic theory of games. The discussion developed points out to the existence of an “optimal strategy” for both the ‘Economy’ and ‘Health’ player, capable of maximizing the expected payoff for the population. From the application of the Pareto Equilibrium combined with the Coase Theorem, there is an opportunity to eliminate market and government failures with the achievement of a ‘Social Optimum’ throughout this and eventual future pandemics.

Mechanisms of Effective Governance and Cooperation: Comparative Analysis of the European States

The research performs an attempt to adapt accumulated approaches of the Institutional Economics to the application of the Coase theorem in public administration. Governance is mainly analyzed in the field of political science, while transactional costs definitely serve to the economic surveys. Solving the problem of social costs, Coase theorem revealed a conception of property rights as the outcome of mere contracting in independent exchanges. This conception is applicable for analyzing a wide range of issues, including externalities related to the use of assets and public goods. The article contains a brief characteristic of the self-governance in European states. The results of comparative analysis of the local governance in European region became a basis for proposing a series of transformation tools for Ukraine and neighboring states in this field. Obtained results of statistical modeling and payoff matrix of Nash equilibrium clearly confirm the validity of the Coase theorem for interpretation of the interaction between local self-governance and government institutions.

Law and Economics, or Punctum Archimedis in Environmental Law

This article examines the autonomous field of Law and Economics, indicates the importance of integrating the economical methodology in the process of comprehensively understanding the normative order and laments over the undesirable shortage of interdisciplinary education and academic dialogue regarding Law and Economics in Georgia. Moreover, this paper deliberates on the relevance of the Coase theorem for lawyers and policy-makers, displays the specific recommendations of its application in jurisprudence, including elucidating property rights, maximizing economic productivity and minimizing transaction costs. The following article discusses attempts and shortcomings to harmonize a decentralized market solution in environmental law and demonstrates regarding the example of the EU emission trading system that the method of Law and Economics can be used not only for a thorough analysis of the existing model but also as a pragmatic instrument for defining a normative program.

Part II Analytical Approaches, Ch.10 Economics

This chapter explains that the starting point for the economic approach to both domestic as well as international environmental law is that environmental problems (including but not limited to environmental pollution) constitute a market failure. From this economic perspective transboundary environmental pollution emerges. Moreover, global environmental quality is, from an economic perspective, a so-called public good of which all states will benefit. But since no state can exclude others from benefitting from this global environmental good, there is a danger of ‘free-riding’ as a result of which this global public good (environmental quality) may be insufficiently produced. These starting points provide a basis for the emergence of international environmental law, more particularly treaty law. However, a classic paradigm in what has become known as the law and economics literature is the Coase Theorem. The chapter then addresses the likelihood of Coasean solutions to emerge as a remedy to transboundary environmental pollution. It also looks at reasons for states to conclude treaties.

When Do Firms Trade Patents?

Drawing on the Coase theorem, we consider a firm’s decision to transfer patent ownership to another firm in the markets for innovation. We deem that the proximity of a patent’s technology structure to that of a firm’s patent portfolio will generally result in greater marginal productivity of the patent, leading to enhanced prospects for the firm’s economic return. We thus predict that firms are more likely to trade patents when the technology structure of a patent is closer to the technology stock of a potential buyer compared with that of its original assignee. However, such a relationship will be weaker when a potential buyer and the original assignee have greater product-market overlap or when the assignee has superior technological capability. We test these predictions by employing a dyad-level analysis of transactional decisions during the 1987–2016 period on 40,110 U.S. patents assigned to 57 major biopharmaceutical firms. Our study provides novel insights on factors that facilitate or inhibit patent trade in the markets for innovation.

ON THE COASE THEOREM AS A THEORETICAL BASIS FOR THE KYOTO AND PARIS PROTOCOLS

Purpose of the study: a critical examination of the so-called Coase theorem, which is largely the theoretical basis of the idea of trading in emission quotas for greenhouse gas emissions. Since the research is theoretical, research methods: critical analysis of texts written by researchers who adhere to the economic mainstream and theoretical construction. In our opinion, Coase's theorem is essentially reduced to indicating that two conditions are implicitly assumed in the proof of the optimality of the ideal market model: 1) the absence of transaction costs; 2) fully defined property rights to all resources, in any way involved in the transactions in question. The problem is that these two conditions in a situation of environmental problems are completely unrealistic. Therefore, the question of optimal environmental and economic regulation cannot be considered closed. Moreover, it is impossible to present this problem as already solved when writing textbooks for students and graduate students. Those who study must be aware of the real complexity of the problem of unwanted externalities destroying the Earth's biosphere. Only in this case, having become managers and politicians, they will be able to stop negative processes in the biosphere and implement the declarations adopted in Rio de Janeiro, Kyoto and Paris in the common interests of all people living on Earth.

Clubs, Coase, and the Role of Government

As Ronald Coase and others have shown, deducing the appropriate role of the government in the economy requires a comparative institutions approach. Trying to generalize from oversimplified specifications regarding transaction costs, according to whether exclusion is possible or not, is a futile exercise. An alternative to the Ostrom matrix is to distinguish private, club, and collective consumption goods according to their technical characteristics, specifically their degree of congestabiilty. The other box of the Ostrom matrix, “common pool” resources, can also be usefully analyzed from a club perspective. Spillover goods are spatial clubs. Lastly, a version of the Coase theorem is offered, which provides the foundation of comparative institutional analysis.