what causes market failure

There are situations and circumstances where the market is not Pareto optimal or Pareto efficient. These situations are called market failure. An economist’s suggestion during these situations is government intervention which is necessary through better policy decisions. Some of the major causes of market failure are:- 1. Imperfect Markets:- Pareto efficiencyRead More →

schempeter's theory economics

Joseph Alois Schumpeter (1888-1952) is an important economist in the history of economic thought. His methods of analysis and ideas about what causes development in a capitalist economy were different from classical economists. His theory emphasizes the evolutionary process of the capitalist economy. Capitalist economy is an economy in whichRead More →

real business cycle theory ignou economics

What is Real Business Cycle (RBC) theory RBC theory belongs to the new classical macroeconomics models in which business-cycle fluctuates to a large extent and can be accounted for by real (in contrast to nominal) shocks. Unlike other leading theories of the business cycle, RBC theory sees business cycle fluctuations as the efficient response toRead More →

game-theory economics

What is ‘Game Theory’ It is the study of human conflict and cooperation within a competitive situation. In some respects, game theory is the science of strategy, or at least the optimal decision-making of independent and competing actors in a strategic setting. The key pioneers of game theory were mathematiciansRead More →