Archives: Terms

Definition of Dual-Sector Model The dual-sector model, also known as the Lewis model after its creator, Sir W. Arthur Lewis, is an economic concept that describes the transition of labor from traditional agriculture to more modern industrial sectors. This model is based on the assumption that developing countries possess a […]

Definition of Downs-Thomson Paradox The Downs-Thomson Paradox describes a phenomenon in urban transportation theory which posits that improving public transportation or increasing road traffic congestion can lead to a situation where average travel times in a city remain constant or even increase. This counterintuitive outcome arises because improvements in public […]

Definition of Doughnut Economics Doughnut Economics is a visual framework for sustainable development – shaped like a doughnut or lifebuoy – devised by English economist Kate Raworth. It combines the concept of planetary boundaries with the complementary concept of a social foundation, aiming to ensure that everyone has access to […]

Definition of Double Marginalization Double marginalization is a phenomenon that occurs in the sphere of economics when there is a sequential layering of margins added to the cost of a product. This typically happens in a supply chain composed of monopolistic entities where each entity, exercising monopoly power, adds its […]

Definition of Dorfman-Steiner Theorem The Dorfman-Steiner theorem is an economic principle that describes the optimal level of advertising expenditure for a firm. This theorem states that a firm maximizes its profit when the ratio of advertising to sales is equal to the product of the markup on goods (price minus […]

Definition of the Domar Serfdom Model The Domar Serfdom Model is an economic theory developed by Evsey Domar which attempts to explain the prevalence of serfdom and the conditions under which it thrived, particularly in pre-industrial societies. It suggests that the economic and social structures of serfdom were directly related […]

Definition of Dollar Auction The dollar auction is a paradoxical game where an auctioneer sells a dollar bill in an auction where the rules are anything but ordinary. In this game, not only does the highest bidder win the monetary value being auctioned, but the second-highest bidder also must pay […]

Definition of Dixit–Stiglitz Model The Dixit-Stiglitz model is an influential theoretical framework in the field of international trade and industrial organization, developed by economists Avinash Dixit and Joseph Stiglitz. This model investigates the effects of monopolistic competition on the diversity of products, economies of scale, and the welfare implications of […]

Definition of Dividend Imputation Dividend imputation is a tax system mechanism designed to reduce or eliminate the double taxation of dividends. In traditional systems without imputation, corporations pay taxes on their profits, and then shareholders pay taxes on the dividends received, essentially taxing the same money twice. Dividend imputation allows […]

Definition of Distribution Distribution in economics refers to the way total goods and services are spread across a society. It encompasses the processes through which these goods and services are delivered to consumers, as well as the distribution of income among members of society. The concept plays a critical role […]