Jean J. Gabszewicz
- Published in print:
- 2000
- Published Online:
- November 2003
- ISBN:
- 9780198233411
- eISBN:
- 9780191596292
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0198233418.001.0001
- Subject:
- Economics and Finance, Microeconomics
Perfect competition provides a model of a frictionless economy in which economic agents behave independently of each other, abandoning to the market the task of coordinating their individual ...
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Perfect competition provides a model of a frictionless economy in which economic agents behave independently of each other, abandoning to the market the task of coordinating their individual decisions. This model is extensively studied in traditional price theory textbooks.Imperfect competition is the paradigm that develops when, on the contrary, economic agents interact in a conscious manner, which is necessarily the case when competition takes place ‘among the few’. In this system, agents act strategically, taking into account the impact of their own decisions on competitors ‘behaviour and on the price mechanism. Such situations commonly arise when firms differentiate their products, erect strategic entry barriers, or exploit the imperfect information of their customers about the price or characteristics of their product.This book explores the theoretical richness of these economic contexts, using some basic concepts of game theory. The four assumptions underlying the paradigm of perfect competition (no barriers to entry, large number of agents, product homogeneity, and perfect information) constitute the natural departure points of the theories of imperfect competition: whenever at least one of these assumptions is violated, imperfect competition is present. The framework of the book is organized around the four corresponding themes: the role of collusion and entry barriers in the degree of market competition (Ch. 3), product differentiation (Ch. 4) and the information of agents as an instrument of competition (Ch. 5). Finally, Ch. 6 illustrates the possibility of extending the theory to a general equilibrium framework.Less
Perfect competition provides a model of a frictionless economy in which economic agents behave independently of each other, abandoning to the market the task of coordinating their individual decisions. This model is extensively studied in traditional price theory textbooks.
Imperfect competition is the paradigm that develops when, on the contrary, economic agents interact in a conscious manner, which is necessarily the case when competition takes place ‘among the few’. In this system, agents act strategically, taking into account the impact of their own decisions on competitors ‘behaviour and on the price mechanism. Such situations commonly arise when firms differentiate their products, erect strategic entry barriers, or exploit the imperfect information of their customers about the price or characteristics of their product.
This book explores the theoretical richness of these economic contexts, using some basic concepts of game theory. The four assumptions underlying the paradigm of perfect competition (no barriers to entry, large number of agents, product homogeneity, and perfect information) constitute the natural departure points of the theories of imperfect competition: whenever at least one of these assumptions is violated, imperfect competition is present. The framework of the book is organized around the four corresponding themes: the role of collusion and entry barriers in the degree of market competition (Ch. 3), product differentiation (Ch. 4) and the information of agents as an instrument of competition (Ch. 5). Finally, Ch. 6 illustrates the possibility of extending the theory to a general equilibrium framework.
Tito Boeri, Micael Castanheira, Riccardo Faini, Vincenzo Galasso, Giorgio Barba Navaretti, Carcillo Stéphane, Jonathan Haskel, Giuseppe Nicoletti, Enrico Perotti, Carlo Scarpa, Lidia Tsyganok, and Christian Wey
- Published in print:
- 2006
- Published Online:
- May 2007
- ISBN:
- 9780199203628
- eISBN:
- 9780191708169
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199203628.003.0012
- Subject:
- Economics and Finance, Public and Welfare
This chapter considers instances in which widening the political base for reform may still be desirable, but is practically unfeasible. This scenario typically emerges when the benefits from reform ...
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This chapter considers instances in which widening the political base for reform may still be desirable, but is practically unfeasible. This scenario typically emerges when the benefits from reform are dispersed among many economic agents, postponed to future generations, or are highly uncertain — as, for example, with the liberalization of a ‘strategic’, traditionally highly regulated market — where costs are highly visible and relatively concentrated. Since buying out the opposition of vested interests is too costly or would largely limit the scope for reform, policy-makers must resort to a different strategy. The recipe adopted by successful policy-makers — particularly when liberalizing nonmanufacturing industries — is to ‘divide and conquer’. This strategy aims at disentangling entrenched vested interests by concentrating the costs of the reform on particular groups.Less
This chapter considers instances in which widening the political base for reform may still be desirable, but is practically unfeasible. This scenario typically emerges when the benefits from reform are dispersed among many economic agents, postponed to future generations, or are highly uncertain — as, for example, with the liberalization of a ‘strategic’, traditionally highly regulated market — where costs are highly visible and relatively concentrated. Since buying out the opposition of vested interests is too costly or would largely limit the scope for reform, policy-makers must resort to a different strategy. The recipe adopted by successful policy-makers — particularly when liberalizing nonmanufacturing industries — is to ‘divide and conquer’. This strategy aims at disentangling entrenched vested interests by concentrating the costs of the reform on particular groups.
James Simpson
- Published in print:
- 2011
- Published Online:
- October 2017
- ISBN:
- 9780691136035
- eISBN:
- 9781400838882
- Item type:
- chapter
- Publisher:
- Princeton University Press
- DOI:
- 10.23943/princeton/9780691136035.003.0001
- Subject:
- Economics and Finance, Economic History
This chapter looks at the nature of grape production and wine making on the eve of the railways. The process of creating wine followed a well-determined sequence: grapes were produced in the ...
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This chapter looks at the nature of grape production and wine making on the eve of the railways. The process of creating wine followed a well-determined sequence: grapes were produced in the vineyard; crushed, fermented, and sometimes matured in the winery; and blended (and perhaps matured further) in the merchant's cellar; finally, the wine was drunk in a public place or at home. This chapter looks at the major decisions that economic agents faced when carrying out these activities. It examines the nature of wine and the economics of grape and wine production, market organization, and the development of fine wines for export before 1840.Less
This chapter looks at the nature of grape production and wine making on the eve of the railways. The process of creating wine followed a well-determined sequence: grapes were produced in the vineyard; crushed, fermented, and sometimes matured in the winery; and blended (and perhaps matured further) in the merchant's cellar; finally, the wine was drunk in a public place or at home. This chapter looks at the major decisions that economic agents faced when carrying out these activities. It examines the nature of wine and the economics of grape and wine production, market organization, and the development of fine wines for export before 1840.
Hans‐Peter Kohler
- Published in print:
- 2001
- Published Online:
- November 2003
- ISBN:
- 9780199244591
- eISBN:
- 9780191596544
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0199244596.003.0001
- Subject:
- Economics and Finance, Development, Growth, and Environmental
Reviews the literature and empirical findings of European and contemporary fertility declines. It contrasts these findings with the primary economic and non‐economic theories of fertility, and it ...
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Reviews the literature and empirical findings of European and contemporary fertility declines. It contrasts these findings with the primary economic and non‐economic theories of fertility, and it motivates the necessity to apply interacting economic agents to the context of demographic change.Less
Reviews the literature and empirical findings of European and contemporary fertility declines. It contrasts these findings with the primary economic and non‐economic theories of fertility, and it motivates the necessity to apply interacting economic agents to the context of demographic change.
Yves Balasko
- Published in print:
- 2011
- Published Online:
- October 2017
- ISBN:
- 9780691146799
- eISBN:
- 9781400838912
- Item type:
- chapter
- Publisher:
- Princeton University Press
- DOI:
- 10.23943/princeton/9780691146799.003.0001
- Subject:
- Economics and Finance, History of Economic Thought
This chapter develops the main aspects of the economic environment in which economic agents operate. There are two categories of economic agents, consumers and firms. Consumers buy and sell goods ...
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This chapter develops the main aspects of the economic environment in which economic agents operate. There are two categories of economic agents, consumers and firms. Consumers buy and sell goods with the ultimate goal of consuming those goods. Firms buy goods that they transform into other goods that they later sell. An economy is made up of these consumers and firms. After having developed models of the consumers and firms, these are combined into a model of an economy with private ownership of production. But before developing these models, it is necessary to be somewhat more explicit about the economic goods and their prices that define the economic environment.Less
This chapter develops the main aspects of the economic environment in which economic agents operate. There are two categories of economic agents, consumers and firms. Consumers buy and sell goods with the ultimate goal of consuming those goods. Firms buy goods that they transform into other goods that they later sell. An economy is made up of these consumers and firms. After having developed models of the consumers and firms, these are combined into a model of an economy with private ownership of production. But before developing these models, it is necessary to be somewhat more explicit about the economic goods and their prices that define the economic environment.
Eric Barthalon
- Published in print:
- 2014
- Published Online:
- November 2015
- ISBN:
- 9780231166287
- eISBN:
- 9780231538305
- Item type:
- chapter
- Publisher:
- Columbia University Press
- DOI:
- 10.7312/columbia/9780231166287.003.0012
- Subject:
- Economics and Finance, Behavioural Economics
This book concludes by summarizing the key arguments in the form of a comparison of the HRL formulation with the rational expectations hypothesis (REH). It explains what makes Maurice Allais's ...
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This book concludes by summarizing the key arguments in the form of a comparison of the HRL formulation with the rational expectations hypothesis (REH). It explains what makes Maurice Allais's contribution original, important, and modern. To start with, many of the rational expectations theorists' criticisms of standard adaptive expectations do not apply to the HRL formulation. The HRL formulation is much more sophisticated and much more rational than the standard adaptive expectations model tolerated by the REH advocates when economic variables are interdependent. Furthermore, the variability of the rate of memory decay is endogenous both to economic agents and to the environment they are responding to. Parsimony, nonlinearity and time variability of the gain, unequal weighting of past observations according to a well-specified and stable law of forgetting, absence of patterns in forecasting errors—these are the features that make Allais's HRL formulation worth the consideration of economists wishing to explore or to revisit the unsettled and important question of “expectations” formation.Less
This book concludes by summarizing the key arguments in the form of a comparison of the HRL formulation with the rational expectations hypothesis (REH). It explains what makes Maurice Allais's contribution original, important, and modern. To start with, many of the rational expectations theorists' criticisms of standard adaptive expectations do not apply to the HRL formulation. The HRL formulation is much more sophisticated and much more rational than the standard adaptive expectations model tolerated by the REH advocates when economic variables are interdependent. Furthermore, the variability of the rate of memory decay is endogenous both to economic agents and to the environment they are responding to. Parsimony, nonlinearity and time variability of the gain, unequal weighting of past observations according to a well-specified and stable law of forgetting, absence of patterns in forecasting errors—these are the features that make Allais's HRL formulation worth the consideration of economists wishing to explore or to revisit the unsettled and important question of “expectations” formation.
Itzhak Gilboa, Larry Samuelson, and David Schmeidler
- Published in print:
- 2015
- Published Online:
- May 2015
- ISBN:
- 9780198738022
- eISBN:
- 9780191801419
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780198738022.001.0001
- Subject:
- Economics and Finance, Econometrics
The book describes formal models of reasoning that are aimed at capturing the way that economic agents and decision makers in general think about their environment and make predictions based on their ...
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The book describes formal models of reasoning that are aimed at capturing the way that economic agents and decision makers in general think about their environment and make predictions based on their past experience. The focus is on analogies (case-based reasoning) and general theories (rule-based reasoning), and on the interaction between them, as well as between them and Bayesian reasoning. A unified approach allows us to study the dynamics of inductive reasoning in terms of the mode of reasoning that is used to generate predictions.Less
The book describes formal models of reasoning that are aimed at capturing the way that economic agents and decision makers in general think about their environment and make predictions based on their past experience. The focus is on analogies (case-based reasoning) and general theories (rule-based reasoning), and on the interaction between them, as well as between them and Bayesian reasoning. A unified approach allows us to study the dynamics of inductive reasoning in terms of the mode of reasoning that is used to generate predictions.
David P. Baron
- Published in print:
- 2009
- Published Online:
- August 2013
- ISBN:
- 9780262162500
- eISBN:
- 9780262259132
- Item type:
- chapter
- Publisher:
- The MIT Press
- DOI:
- 10.7551/mitpress/9780262162500.003.0003
- Subject:
- Political Science, Political Theory
This chapter is a presentation of a theory of industry collective action despite the arousal of change in practice and policies created by social pressure from “private politics,” which is often used ...
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This chapter is a presentation of a theory of industry collective action despite the arousal of change in practice and policies created by social pressure from “private politics,” which is often used to attempt a change in the behaviour of economic agents. More often than not, nongovernmental organizations and social activists are these agents. The chapter focuses on how these clubs, or voluntary organizations, were formed, their choice of a standard for their products, and how that choice is affected by social pressure. Here we see certain models and examples of which firms would be inclined to join an industry-sponsored club and which would not. The chapter formulates a complex model of industry behaviour and a model of social pressure by combining two particular models. In conclusion, it discusses a number of aspects of the collective choice of credence standards and why they require additional research.Less
This chapter is a presentation of a theory of industry collective action despite the arousal of change in practice and policies created by social pressure from “private politics,” which is often used to attempt a change in the behaviour of economic agents. More often than not, nongovernmental organizations and social activists are these agents. The chapter focuses on how these clubs, or voluntary organizations, were formed, their choice of a standard for their products, and how that choice is affected by social pressure. Here we see certain models and examples of which firms would be inclined to join an industry-sponsored club and which would not. The chapter formulates a complex model of industry behaviour and a model of social pressure by combining two particular models. In conclusion, it discusses a number of aspects of the collective choice of credence standards and why they require additional research.
