Category: Articles

Perfect Competition or Collusion?

Posted on by Rhys Williams

    I recently interviewed for a Cambridge college as part of the undergrad admissions process and one of the questions I asked was as follows:

    “We have a scenario where two shops (e.g. supermarkets) are selling the same product (e.g. chocolate bar) at the same price, does this necessarily mean that collusion is occurring? What other factors might the authority want information on?”

    I find this to be an interesting question, as there isn’t a right or wrong answer and so it allowed applicants to discuss a wide range of economic phenomena, from market structure to pricing decisions and I wanted to elaborate upon a few of these points here. [...]

    Theories of Capital Structure

    Posted on by Rhys Williams

    I don’t normally venture in to discussions of financial topics but I have recently taken a course on Corporate Finance and whilst it isn’t my normal cup of tea it was quite interesting and I learned a lot! In today’s article, I therefore want to summarise some concepts around capital structure and discuss the various theories I learned which go some way to explain observed differences in leverage ratios of companies (although, there is no universal theory of debt, there are instead theories which may apply in different circumstances).

    To start, the capital structure of a company refers to how it finances its operations and growth. [...]

    Why do we need to work?

    Posted on by Rhys Williams

    I’ve been reading David Graeber’s “Bullshit Jobs” which I got into after reading his essay on it a few years ago (here). At the time I was struck by the comments from Keynes (Economic Possibilities for our Grandchildren – here), who believed that in 100 years, technological developments will be such that all activities will be conducted by machine’s and so humans would only choose to work around 3 hours a day. Keynes believed that people would still choose to work a little amount – witnessed by the fact that at the time, the wives of the very rich, often spent some time doing charitable work – so that we have a sense of purpose and because some jobs are enjoyable. [...]

    Behavioural Economics – Some notes

    Posted on by Rhys Williams

    The advent of the neoclassical approach to establish economics as a science, led to the disappearance of many psychological insights already made by economists, for example Smith says “we suffer more… when we fall from a better to a worse situation, than we ever enjoy when we rise from a worse to a better.” And Edgeworth points out that one agent’s utility can be affected by another agent’s payoff. One development of neoclassical economics was the formulation of the expected utility framework which makes precise assumptions that can be falsified, it assumes stable and consistent preferences, the ability to perform complex computations, and an ability to memorise a large amount of information. [...]