Archives: Terms

Definition of Bertrand Paradox The Bertrand Paradox is a concept in economics, specifically within the realm of game theory and oligopoly models, that demonstrates a situation where two firms (oligopolists) engage in price competition with identical products leading to the price equaling marginal cost, effectively erasing any economic profit. This […]

Definition of the Bertrand-Edgeworth Model The Bertrand-Edgeworth model is a theoretical framework within economics that extends beyond the classic Bertrand competition by incorporating capacity constraints. This model is named after two economists, Joseph Bertrand and Francis Ysidro Edgeworth, who developed concepts of how firms compete on price within a market. […]

Definition of Bertrand Competition Bertrand competition is a theoretical model of competition used in economics to describe interactions among firms that compete on price. Named after the French mathematician and economist Joseph Bertrand, this model contrasts with the Cournot competition model, which focuses on quantity instead of price. Bertrand competition […]

Definition of Bequest Motive The bequest motive refers to the intention or desire of individuals to pass on their wealth and assets to their descendants or heirs upon death. This concept is an essential aspect of financial planning and wealth management, highlighting the intergenerational transfer of assets. It encapsulates not […]

Definition of the Bellman Equation The Bellman equation, named after Richard Bellman, is a fundamental concept in the field of dynamic programming and control theory. It represents a recursive decomposition strategy to solve optimization problems by breaking them down into simpler subproblems. The equation provides a methodology to calculate the […]

Definition of Beckstrom’s Law Beckstrom’s Law is an economic principle that measures the efficiency and value of networks. This law posits that the value of a network is equal to the net value added to each user’s transactions conducted through that network, summed over all users. In simpler terms, it […]

Definition of Base Erosion and Profit Shifting (BEPS) Base Erosion and Profit Shifting (BEPS) refers to tax planning strategies used by multinational companies that exploit gaps and mismatches in tax rules to artificially shift profits to low or no-tax locations where there is little or no economic activity, resulting in […]

Definition of the Bargaining Model of War The bargaining model of war is a conceptual framework used to understand why and how wars occur despite both parties having the potential to reach a mutually beneficial agreement without resorting to conflict. This model posits that war is a result of failed […]

Definition of Bankruptcy Bankruptcy is a legal proceeding involving a person or business that is unable to repay their outstanding debts. The bankruptcy process begins with a petition filed by the debtor (which is most common) or on behalf of creditors (which is less common). All of the debtor’s assets […]

Definition of Bank Rate The bank rate, often referred to as the discount rate in the United States, is the rate of interest which a central bank charges on its loans and advances to a commercial bank. A change in the bank rate signals the central bank’s policy to either […]