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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 ...
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 ...
X-inefficiency is a concept used in economics to describe instances where firms go through internal inefficiency resulting in higher production costs than required for a given output. This inefficiency is a result of various factors such as outdated technology, inefficient production processes, poor management and lack of competition resulting ...
In economics, an Edgeworth box, sometimes referred to as an Edgeworth-Bowley box, is a graphical representation of a market with just two commodities, X and Y, and two consumers. The dimensions of the box are the total quantities Ω x and Ω y of the two goods. Let the consumers be Octavio and Abby. The top right-hand corner of the box ...
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 ...
Harvey Leibenstein (1922 – February 28, 1994) was a Ukrainian -born American economist. One of his most important contributions to economics was the concept of X-inefficiency and the critical minimum effort thesis in development economics. Concerning his critical minimum effort thesis, he claimed that the underdeveloped countries are trapped ...
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.