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v. t. e. In economics, specifically general equilibrium theory, a perfect market, also known as an atomistic market, is defined by several idealizing conditions, collectively called perfect competition, or atomistic competition. In theoretical models where conditions of perfect competition hold, it has been demonstrated that a market will reach ...
Imperfect competition. 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] Imperfect competition usually describes behaviour of ...
Information asymmetry. Diagram illustrating the balance of power with perfect information by buyers and sellers. In contract theory, mechanism design, and economics, an information asymmetry is a situation where one party has more or better information than the other. Information asymmetry creates an imbalance of power in transactions, which ...
Market failure. While factories and refineries provide jobs and wages, they are also an example of a market failure, as they impose negative externalities on the surrounding region via their airborne pollutants. In neoclassical economics, market failure is a situation in which the allocation of goods and services by a free market is not Pareto ...
In welfare economics, the theory of the second best (also known as the general theory of second best or the second best theorem) [1] concerns the situation when one or more optimality conditions cannot be satisfied. The economists Richard Lipsey and Kelvin Lancaster showed in 1956, that if one optimality condition in an economic model cannot be ...
Beveridge curve. A Beveridge curve, or UV curve, is a graphical representation of the relationship between unemployment and the job vacancy rate, the number of unfilled jobs expressed as a proportion of the labour force. It typically has vacancies on the vertical axis and unemployment on the horizontal. The curve, named after William Beveridge ...
In economics, general equilibrium theory attempts to explain the behavior of supply, demand, and prices in a whole economy with several or many interacting markets, by seeking to prove that the interaction of demand and supply will result in an overall general equilibrium. General equilibrium theory contrasts with the theory of partial ...
Free-rider problem. In economics, the free-rider problem is a type of market failure that occurs when those who benefit from resources, public goods and common pool resources do not pay for them [1] or under-pay. Examples of such goods are public roads or public libraries or other services or utilities of a communal nature.