Economics

3 breaks

Prices, incentives and why markets do what they do.

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Why two ice-cream vendors end up side by side: Hotelling's beach Two ice-cream vendors share a long beach, and every swimmer walks to the nearer cart. Where should each one park? Drag the carts and watch the dividing line… Economics4 min read Why a free shortcut can make everyone's commute longer: Braess's paradox Build a brand-new road and every commute gets longer. In a town of 4,000 drivers, two routes each take 65 minutes. Add a free shortcut and each driver… Economics5 min read Why adding a road can slow every driver down: Braess's paradox You would think a free shortcut can only help. In 1968 the mathematician Dietrich Braess showed it can make every driver slower. In our four-road example… Economics4 min read