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Showing posts with the label non rival

Decision Making as Output and Bounded Rationality

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  The classical economics theories proceed on the assumption of rational agents. Rationality implies the economic agents undertake actions or exercise choices based on the cost-benefit analysis they undertake. The assumption further posits that there exists no information asymmetry and thus the agent is aware of all the costs and benefits associated with the choice he or she has exercised. The behavioral school contested the decision stating the decisions in practice are often irrational. Implied there is a continuous departure from rationality. Rationality in the views of the behavioral school is more an exception to the norm rather a rule. The past posts have discussed the limitations of this view by the behavioral school. Economics has often posited rationality in the context in which the choices are exercised rather than theoretical abstract view of rational action. Rational action in theory seems to be grounded in zero restraint situation yet in practice, there are numerous restra
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Why Government Has to Provide Public Goods? No Private Army or Police or Justice System!

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  Economics literature recognizes the differential nature of goods. Each good is unique in itself. It must be pointed out that in economics, good is something than enhances economic welfare while bad is something that reduces economic welfare. For practical reasons, one can assume economic welfare to be equivalent to social welfare. Secondly, contrary to public perception about distinctions between goods and services, economics literature clusters both of them into goods (the singular of which is good). The past post “ Examining the Nature of Good ” went to certain depth in examining the nature and classification of goods. The current post would seek to build up on the same and strive to understand why certain goods are provided in the market whereas certain goods are offered only by the government. In theory, nothing prevents the private sector from offering every good, or in other words converting each good into either private or club good. Similarly, nothing prevents the government
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Examining Digital Goods

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An earlier piece Examining the Nature of Goods , discussed the classification of goods around the notions of exclusion and rivalry.   The brick and mortar era made it relatively easier to classify goods on this basis. Digital goods emerged on the horizon with the rise in the technology industry. The role of digital goods both in production, consumption and the impact has been swift, wide and deep. Discussions on the nature of digital goods commence from an attempt in defining the good. One such authoritative attempt was by Danny Quah in 2002. For Quah, a digital good is a payoff-relevant bit-string, i.e., a sequence of binary digits, 0s and 1s. These combinations of zeroes and ones potentially impact the efficacy of an individual or an economy. Implied is digital goods is akin to a recipe. Each bit-string is encoded with economically valuable instructions influencing the payoff on both production and consumption. Thus as opposed to orthodox analysis of goods revolving around pro
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