Market (economics)

Summary

In economics, a market is a composition of systems, institutions, procedures, social relations or infrastructures whereby parties engage in exchange. While parties may exchange goods and services by barter, most markets rely on sellers offering their goods or services (including labour power) to buyers in exchange for money. It can be said that a market is the process by which the prices of goods and services are established. Markets facilitate trade and enable the distribution and allocation of resources in a society. Markets allow any tradeable item to be evaluated and priced. A market emerges more or less spontaneously or may be constructed deliberately by human interaction in order to enable the exchange of rights (cf. ownership) of services and goods. Markets generally supplant gift economies and are often held in place through rules and customs, such as a booth fee, competitive pricing, and source of goods for sale (local produce or stock registration). Markets can differ by p

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https://en.wikipedia.org/wiki/Market_(economics)

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This study concerns the economics of innovation in the area of medical innovation -new diagnostics, medicines and vaccines-, and in particular how innovation contributes to meeting public health needs. Significant advances have taken place in medical science and technological innovations to prevent and treat diseases that are associated to the strong research and innovation system characteristic of the biomedical and pharmaceutical industry in developed countries. However, firms are reluctant to mobilize this capacity towards disease areas where there are significant health needs but the market is not profitable. As a result, less socially valuable innovation takes place than would otherwise be desirable. This problem is analysed in this study through institutional analysis, applied to the area of neglected diseases. The term neglected diseases is used to refer to a group of diseases that affect over 1 billion people worldwide, persist under conditions of poverty and are concentrated mainly in developing countries. Previous studies of the problem of the gap of innovation in neglected diseases have focused on identifying the market failures that cause for-profit firms to invest very little in R&D and innovation in neglected diseases, and advance ideas for new or additional incentives that could encourage greater participation of firms in this area, such as guaranteed payments for R&D efforts or new medical products developed. This study takes on a different approach, centred on analyxing the institutional framework in which R&D and innovation dynamics take place. In particular, the study analyses a recent phenomena: the appearance of a new form of institutional experiment - private non-profit entities organized as product development partnerships (PDPs) that act as "system integrators" to leverage the resources and capabilities of a network of public, philanthropic and private sector partners towards R&D in neglected diseases. The study also examines how this novel PDP institution responds to a well-known incentive mechanism in medical innovation - intellectual property rights. The study finds that PDPs respond differently to IPRs than for-profit firms, and this indicates there are variations in the value, use and impact of IPRs under different institutional settings, beyond the firm. Finally, the study analyses the challenges in leveraging traditional medicinal knowledge to address health needs, particularly in developing countries, and finds that as the traditional institutions that have supported traditional medicine are under strain, new institutions are needed to support this knowledge as it becomes fragile and is more likely to suffer from deterioration or even disappearance, as compared to scientific knowledge.

EPFL2015

Self-Exciting Point Processes: Identification and Control

Michael Mark

This thesis addresses theoretical and practical aspects of identification and subsequent control of self-exciting point processes. The main contributions correspond to four separate scientific papers.In the first paper, we address the challenge of robust identification of controlled Hawkes processes in applications with sparsely available data. Specifically, we propose an alternative approach based on an expectation-maximization algorithm, which instrumentalizes the internal branching structure of the process, thus improving the estimator's convergence behavior. Additionally, we show that our method provides a tight lower bound for maximum-likelihood estimates. The relevance of the proposed technique is demonstrated on the practical application of credit collections and trading in the presence of macroeconomic news. The second and third paper focus on the optimal control of self-exciting point processes using the reinforcement-learning paradigm. Contrary to traditional reinforcement learning applications, environments driven by Hawkes-like dynamics feature an asynchronous action-reward relationship which complicates attributing actions to their consequent rewards, and thus hinders learning. To this end, we formulate a novel reward shaping theorem that provides a continuous reward analogue that enables learning in such environments. Furthermore, with the growing need for interpretable machine-learning models we formulate a monotonicity regularizer that embeds domain expertise into the learning. Our formulation overcomes the challenge of learning interpretable policies by constraining the policy space with a priori expected structural properties, producing state-feedback control laws that can be readily understood and implemented by human decision-makers. Again the results are developed in the context of credit collections but are straightforwardly applicable to other problems with self-exciting dynamics.Finally, the last paper consists of an empirical investigation of cryptocurrency market microstructure through the optics of Hawkes processes. We construct a 'reflexivity' index that measures the activity generated endogenously within cryptocurrency markets by fitting a univariate self-exciting Hawkes process with two classes of parametric kernels to high-frequency trading data. Our parsimonious model allows for an elegant separation and quantification of endogenous and exogenous dynamics, and thus allows for a direct market microstructure comparison with traditional asset classes in terms of identified branching ratios. Furthermore, we formulate a 'Hawkes disorder problem,' as a generalization of the established Poisson disorder problem, and provide a simulation-based approach to determining an optimal observation horizon---a critical consideration in the high-frequency finance context. Our analysis suggests that Bitcoin mid-price dynamics feature long-memory properties, well explained by the power-law kernel, at a level of criticality similar to fiat-currency markets.

EPFL2022

Can medical products be developed on a non-profit basis? Exploring product development partnerships for neglected diseases

Dominique Foray, Patrick Gaulé, Viviana Carolina Munoz Tellez de Kieffer, Fabiana Visentin

Reliance on market forces can lead to underinvestment in social welfare enhancing innovation. The lack of new medical products in the area of neglected diseases is a case in point. R&D for neglected diseases has increased with new funding and collaborations taking place mainly through product development partnerships (PDPs). PDPs are self-governing, private non-profit R&D organizations. In contrast to push and pull instruments designed to address private-sector R&D underinvestment, PDPs have emerged voluntarily to address this public health challenge. In this study we examine how non-profit R&D collaboration for neglected diseases takes place through PDPs. We find that PDPs act as 'system integrators' that leverage the resources and capabilities of a network of public, philanthropic and private-sector partners. This paper contributes to an understanding of R&D in a non-profit context and highlights the importance of collaboration and non-market institutions for promoting innovation where market failures occur.

Oxford University Press2015

EPFL2015

Self-Exciting Point Processes: Identification and Control

Michael Mark

EPFL2022