Economic Systems

Coase Theorem Definition

Coase Theorem Definition

Coase theorem is the idea that under certain conditions, the issuing of property rights can solve negative externalities. For example, when a farmer…

Economic System Definition

Economic System Definition

An economic system is a network that forms the economic relationships between individuals in society. In other words, how the people of a nation come together to create a complex whole and conduct economic transactions with each other.

Private property to show the importance of property rights

The Importance of Property Rights

An efficient free market is reliant on strong property rights as a fish is to water. Its purpose is to ensure that competitive control over economic resources is resolved in a peaceful way. Rather than disputes leading to violence, they can be resolved through the legal system.

Incentives Definition

Incentives Definition

In economics, incentives are what encourages an individual to act in a certain way. In other words, how consumers and businesses respond to market signals such as prices and financial benefits.