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In economics and game theory, the decisions of two or more players are called strategic complements if they mutually reinforce one another, and they are called strategic substitutes if they mutually offset one another. These terms were originally coined by Bulow, Geanakoplos, and Klemperer (1985).
Offsets can be defined as provisions to an import agreement, between an exporting foreign company, or possibly a government acting as intermediary, and an importing public entity, that oblige the exporter to undertake activities in order to satisfy a second objective of the importing entity, distinct from the acquisition of the goods and/or services that form the core transaction.
Welfare economics is a branch of economics that uses microeconomic techniques to evaluate economic well-being, especially relative to competitive general equilibrium, with a focus on economic efficiency and income distribution. [13] In general usage, including by economists outside the above context, welfare refers to a form of transfer payment ...
Also called resource cost advantage. The ability of a party (whether an individual, firm, or country) to produce a greater quantity of a good, product, or service than competitors using the same amount of resources. absorption The total demand for all final marketed goods and services by all economic agents resident in an economy, regardless of the origin of the goods and services themselves ...
In economics, a complementary good is a good whose appeal increases with the popularity of its complement. [ further explanation needed ] Technically, it displays a negative cross elasticity of demand and that demand for it increases when the price of another good decreases. [ 1 ]
I.e., the definition includes both substitute goods and independent goods, and only rules out complementary goods. See Gross substitutes (indivisible items) . References
Shephard's lemma is a result in microeconomics having applications in the theory of the firm and in consumer choice. [1] The lemma states that if indifference curves of the expenditure or cost function are convex, then the cost-minimizing point of a given good with price is unique.
In resource economics, Hartwick's rule defines the amount of investment in human capital that is needed to offset declining stocks of non-renewable resources. Solow [ 4 ] showed that, given a degree of substitutability between human capital and natural capital, one way to design a sustainable consumption program for an economy is to accumulate ...