|
Bertrand Paradox (economics)
In economics and commerce, the Bertrand paradox — named after its creator, Joseph Bertrand — describes a situation in which two players (firms) reach a state of Nash equilibrium where both firms charge a price equal to marginal cost ("MC"). The paradox is that in models such as Cournot competition, an increase in the number of firms is associated with a convergence of prices to marginal costs. In these alternative models of oligopoly, a small number of firms earn positive profits by charging prices above cost. Suppose two firms, A and B, sell a homogeneous commodity, each with the same cost of production and distribution, so that customers choose the product solely on the basis of price. It follows that demand is infinitely price-elastic. Neither A nor B will set a higher price than the other because doing so would yield the entire market to their rival. If they set the same price, the companies will share both the market and profits. On the other hand, if either firm were to l ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Joseph Bertrand
Joseph Louis François Bertrand (; 11 March 1822 – 5 April 1900) was a French mathematician who worked in the fields of number theory, differential geometry, probability theory, economics and thermodynamics. Biography Joseph Bertrand was the son of physician Alexandre Jacques François Bertrand and the brother of archaeologist Alexandre Bertrand. His father died when Joseph was only nine years old, but that did not stand in his way of learning and understanding algebraic and elementary geometric concepts, and he also could speak Latin fluently, all when he was of the same age of nine. At eleven years old he attended the course of the École Polytechnique as an auditor (open courses). From age eleven to seventeen, he obtained two bachelor's degrees, a license and a PhD with a thesis on the mathematical theory of electricity and is admitted first to the 1839 entrance examination of the École Polytechnique. Bertrand was a professor at the École Polytechnique and Collège de Fr ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Competition
Competition is a rivalry where two or more parties strive for a common goal which cannot be shared: where one's gain is the other's loss (an example of which is a zero-sum game). Competition can arise between entities such as organisms, individuals, economic and social groups, etc. The rivalry can be over attainment of any exclusive goal, including Recognition (sociology), recognition: Competition occurs in nature, between living organisms which co-exist in the same natural environment, environment. Animals compete over water supplies, food, mates, and other resource (biology), biological resources. Humans usually Survival of the fittest, compete for food and mates, though when these needs are met deep rivalries often arise over the pursuit of wealth, power, prestige, and celebrity, fame when in a static, repetitive, or unchanging environment. Competition is a major tenet of market economy, market economies and business, often associated with business competition as companies a ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Hotelling's Law
Hotelling's law is an observation in economics that in many markets it is rational for producers to make their products as similar as possible. This is also referred to as the principle of minimum differentiation as well as Hotelling's linear city model. The observation was made by Harold Hotelling (1895–1973) in the article "Stability in Competition" in ''Economic Journal'' in 1929. The opposing phenomenon is product differentiation, which is usually considered to be a business advantage if executed properly. Example Suppose there are two competing shops located along the length of a street running north and south, with customers spread equally along the street. Both shop owners want their shops to be where they will get most market share of customers. If both shops sell the same range of goods at the same prices then the locations of the shops are themselves the 'products'. Each customer will always choose the nearer shop as it is disadvantageous to travel to the fa ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Prisoner's Dilemma
The Prisoner's Dilemma is an example of a game analyzed in game theory. It is also a thought experiment that challenges two completely rational agents to a dilemma: cooperate with their partner for mutual reward, or betray their partner ("defect") for individual reward. This dilemma was originally framed by Merrill Flood and Melvin Dresher while working at RAND in 1950. Albert W. Tucker appropriated the game and formalized it by structuring the rewards in terms of prison sentences and named it "prisoner's dilemma". William Poundstone in his 1993 book ''Prisoner's Dilemma'' writes the following version:Two members of a criminal gang are arrested and imprisoned. Each prisoner is in solitary confinement with no means of speaking to or exchanging messages with the other. The police admit they don't have enough evidence to convict the pair on the principal charge. They plan to sentence both to two years in prison on a lesser charge. Simultaneously, the police offer each prisoner a ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Edgeworth Paradox
To solve the Bertrand paradox, the Irish economist Francis Ysidro Edgeworth put forward the Edgeworth Paradox in his paper "The Pure Theory of Monopoly", published in 1897. In economics, the Edgeworth paradox describes a situation in which two players cannot reach a state of equilibrium with pure strategies, i.e. each charging a stable price. A fact of the Edgeworth Paradox is that in some cases, even if the direct price impact is negative and exceeds the conditions, an increase in cost proportional to the quantity of an item provided may cause a decrease in all optimal prices. Due to the limited production capacity of enterprises in reality, if only one enterprise's total production capacity can be supplied cannot meet social demand, another enterprise can charge a price that exceeds the marginal cost for the residual social need. Example Suppose two companies, A and B, sell an identical commodity product, and that customers choose the product solely on the basis of price. Each ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Differentiated Bertrand Competition
As a solution to the Bertrand paradox in economics, it has been suggested that each firm produces a somewhat differentiated product, and consequently faces a demand curve that is downward-sloping for all levels of the firm's price. An increase in a competitor's price is represented as an increase (for example, an upward shift) of the firm's demand curve. As a result, when a competitor raises price, generally a firm can also raise its own price and increase its profits. Calculating the differentiated Bertrand model *q1 = firm 1's demand, *q1≥0 *q2 = firm 2's demand, *q1≥0 *A1 = Constant in equation for firm 1's demand *A2 = Constant in equation for firm 2's demand *a1 = slope coefficient for firm 1's price *a2 = slope coefficient for firm 2's price *p1 = firm 1's price level pr unit *p2 = firm 2's price level pr unit *b1 = slope coefficient for how much firm 2's price affects firm 1's demand *b2 = slope coefficient for how much firm 1's price affects firm 2's demand *q1=A1-a1* ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Bertrand Model
Bertrand competition is a model of competition used in economics, named after Joseph Louis François Bertrand (1822–1900). It describes interactions among firms (sellers) that set prices and their customers (buyers) that choose quantities at the prices set. The model was formulated in 1883 by Bertrand in a review of Antoine Augustin Cournot's book ''Recherches sur les Principes Mathématiques de la Théorie des Richesses'' (1838) in which Cournot had put forward the Cournot model. Cournot's model argued that each firm should maximise its profit by selecting a quantity level and then adjusting price level to sell that quantity. The outcome of the model equilibrium involved firms pricing above marginal cost; hence, the competitive price. In his review, Bertrand argued that each firm should instead maximise its profits by selecting a price level that undercuts its competitors' prices, when their prices exceed marginal cost. The model was not formalized by Bertrand; however, the idea w ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Status Quo Bias
Status quo bias is an emotional bias; a preference for the maintenance of one's current or previous state of affairs, or a preference to not undertake any action to change this current or previous state. The current baseline (or status quo) is taken as a reference point, and any change from that baseline is perceived as a loss or gain. Corresponding to different alternatives, this current baseline or default option is perceived and evaluated by individuals as a positive. Status quo bias should be distinguished from a rational preference for the status quo ante, as when the current state of affairs is objectively superior to the available alternatives, or when imperfect information is a significant problem. A large body of evidence, however, shows that status quo bias frequently affects human decision-making. Status quo bias should also be distinguished from psychological inertia, which refers to a lack of intervention in the current course of affairs. The bias intersects with oth ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Bulletin Of Economic Research
The ''Bulletin of Economic Research'' is a quarterly peer-reviewed academic journal covering the fields of economics, econometrics, and economic history that is published by John Wiley & Sons. It was established in 1948 and publishes full-length articles alongside shorter referenced articles, notes and comments, and survey articles. According to the ''Journal Citation Reports'', the journal has a 2020 impact factor The impact factor (IF) or journal impact factor (JIF) of an academic journal is a scientometric index calculated by Clarivate that reflects the yearly mean number of citations of articles published in the last two years in a given journal, as ... of 0.619, ranking it 334/353 of journals in the category "Economics". References (7) :63-70. External links * {{Official website, http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1467-8586 Wiley-Blackwell academic journals English-language journals Academic journals established in 1948 Quarterly journals ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Bertrand–Edgeworth Model
In microeconomics, the Bertrand–Edgeworth model of price-setting oligopoly looks at what happens when there is a homogeneous product (i.e. consumers want to buy from the cheapest seller) where there is a limit to the output of firms which are willing and able to sell at a particular price. This differs from the Bertrand competition model where it is assumed that firms are willing and able to meet all demand. The limit to output can be considered as a physical capacity constraint which is the same at all prices (as in Edgeworth's work), or to vary with price under other assumptions. History Joseph Louis François Bertrand (1822–1900) developed the model of Bertrand competition in oligopoly. This approach was based on the assumption that there are at least two firms producing a homogenous product with constant marginal cost (this could be constant at some positive value, or with zero marginal cost as in Cournot). Consumers buy from the cheapest seller. The Bertrand– Nash equi ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Macmillan (publisher)
Macmillan Publishers (occasionally known as the Macmillan Group; formally Macmillan Publishers Ltd and Macmillan Publishing Group, LLC) is a British publishing company traditionally considered to be one of the 'Big Five' English language publishers. Founded in London in 1843 by Scottish brothers Daniel and Alexander MacMillan, the firm would soon establish itself as a leading publisher in Britain. It published two of the best-known works of Victorian era children’s literature, Lewis Carroll's ''Alice's Adventures in Wonderland'' (1865) and Rudyard Kipling's ''The Jungle Book'' (1894). Former Prime Minister of the United Kingdom, Harold Macmillan, grandson of co-founder Daniel, was chairman of the company from 1964 until his death in December 1986. Since 1999, Macmillan has been a wholly owned subsidiary of Holtzbrinck Publishing Group with offices in 41 countries worldwide and operations in more than thirty others. History Macmillan was founded in London in 1843 by Daniel ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Francis Edgeworth
Francis Ysidro Edgeworth (8 February 1845 – 13 February 1926) was an Anglo-Irish philosopher and political economist who made significant contributions to the methods of statistics during the 1880s. From 1891 onward, he was appointed the founding editor of ''The Economic Journal''. Life Ysidro Francis Edgeworth- the order of his forenames later reversed- was born in Edgeworthstown, County Longford, Ireland, son of Francis Beaufort Edgeworth and his wife, Rosa Florentina, daughter of Catalan general Antonio Eroles. Francis Beaufort Edgeworth, when "a restless philosophy student at Cambridge on his way to Germany", had met Rosa, a teenage Spanish refugee, on the steps of the British Museum, and they subsequently eloped. Francis Beaufort Edgeworth was son of the politician, writer, and inventor Richard Lovell Edgeworth (father also of the writer Maria Edgeworth), by his fourth wife, the botanical artist and memoirist Frances Anne, daughter of the Anglican clergyman and geog ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
