EconomicsToo

In our recent mock exams, some Year 13 students were confused about the concept of contestable markets. Many defined them as simply being a market with high levels of competition. They often went on to correctly explain the benefits to consumers, as a contestable market does have a similar impact on the behaviour of incumbents (firms already in the market). Contestable markets, in contrast to 'competitive' markets, are where the presence of potential entrants acts as a competitive constraint on the incumbent firms, even if these potential entrants do not actually enter the market. In this context, the concept of contestability is used to capture the degree of competition in a market, with fully contestable markets having zero barriers to entry and exit and the ability of firms to enter and exit the market quickly and easily.  I mentioned this common error to my fellow economist, Mr O'Hagan and he shared with me a brilliant analogy he uses to explain contestable markets: Th...

Few economics educators will have missed the December 2014 documentary by Aditya Chakrabortty on Radio 4 titled Teaching Economics after the Crash . It has likely been discussed in many an A level economics classroom, particularly with students eager to know more about their potential economics degrees...I know a couple of my classes watched it with interest and had many questions about their future economics degrees afterwards...  Unfortunately, few asked "Is what the documentary said actually true?" The documentary did lead to some fascinating discussions with both students and colleagues and whilst all found it enjoyable viewing, it was not particularly clear to enough students that it was a rather unfair and one-sided representation, and a portrayal that most economics degree courses do not typically deserve. I felt that its unbalanced nature could not only have negative consequences in terms of the selections some students made in terms of their future study...