Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Hi there. I have a question about market equilibration through rent-seeking. Here is the model. Initially a market for a good is in competitive equilibrium

Hi there. I have a question about market equilibration through rent-seeking. Here is the model. Initially a market for a good is in competitive equilibrium so participants trade at the equilibrium price. Then there's a change from outside the model, which is that demand for the good decreases. So the demand curve for the market shifts down. Because the market is now in disequilibrium and there's economic rent, participants would trade at a different price from the previous equilibrium price. This continues until they got a new equilibrium for the market. In this situation, who will gain economic rents? I think it is demanders who gain rents while suppliers or producers do not...

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Environmental Economics

Authors: Stephen Smith

6th Edition

0199583587, 9780199583584

More Books

Students also viewed these Economics questions

Question

Define Heideggers terms throwness, Mitwelt, and Umwelt.

Answered: 1 week ago

Question

What does stickiest refer to in regard to social media

Answered: 1 week ago

Question

5. Give some examples of hidden knowledge.

Answered: 1 week ago