hard economicsy things

• tradable pollution permits: EU have 2 billion with each one a tonne of carbon. 90% are allocated to firms based on size while the rest are auctioned off. they are also tradable
• firms with a lower cost of pollution are incentivised to stop their pollution and instead sell their permits. therefore pollution is reduced most by firms with the lowest opportunity costs of reducing pollution which is highly efficient
• Market imperfections: information gaps, monopoly power, factor immobility
• complete Market failure: where a good is not provided by the free market at all (public goods)
• partial Market failure: the market exists but works poorly. all types of market failure that arnt complete or imperfections
• Dambisa Moyo: Dead Aid. Aid is not beneficial as it means that politicians have no incentive to improve infrastructure/ conditions in the nation as that would reduce the amount of aid and they would bet accountable to the taxpayers.
• the Nash equilibrium occurs in game theory when the participants maximise their revenue given the equal strategy of all other participants.
• game theory can be used to determine why firms in an oligopoly exercise price rigidity as it shows all outcomes of a rise or fall in price
• game theory shows that by colluding firms can maximise their joint revenue. however if one undercuts they would earn the highest possible individual revenue