Chapter 3 explores how economics approaches the problem of allocating and distributing scarce environmental goods and services between competing ends. It examines the trade-offs the decision-makers involved in consuming and producing these goods and services face. In a model of the market allocation of a single environmental good or service, two building blocks are established: consumer demand and producer supply. Demand is the willingness of consumers to purchase specific quantities at different prices over a given period, which depends on the economic value they place on that environmental good or service. Supply is the willingness of producers to provide specific quantities to the market at different prices over a given period, which depends on the cost of inputs needed to provide that environmental good or service. Buyers and sellers interact in a market to determine the quantity and the price of an environmental good or service being exchanged and respond to a shortage or surplus. The economically efficient and optimal allocation of an environmental good or service is established in the marketplace, which has economic welfare, sustainability, and social equity implications.

This chapter provides an introduction to mathematical modelling in economics through the study of supply and demand sets, equilibrium and the effect of the imposition of an excise tax.

Chapter 4 reviews the underlying concepts of human capital theory, including a short introduction to the concepts of demand and supply and the relation between marginal productivity and wages. The first section of the chapter reviews the key assumptions of human capital theory – especially the importance of individual choice, the role of individuals’ initial endowments in making choices regarding investments in education and training, and the causal relation between individual skill acquisition and individual labor productivity. The second and third section of the chapter review some fundamental concepts of supply and demand and the relationship between productivity and wages – these sections are meant for students who have had little or no economics. The final section of the chapter discusses the fundamentals of the model of demand for and supply of human capital – first, in the early model of Becker and Chiswick (1966), followed by the more recent life-cycle investment model as described in Neal (2017). These conceptual foundations allow us to move on to more specific human capital analyses in the next two chapters.

The first element of understanding how to improve the health and well-being of a population relies on a thorough assessment of the needs of the specified population, be it a local population defined by geography, a specific age group or those with certain characteristics. This chapter begins by considering how ‘health need’ can be conceptualized; the distinction between need, demand and supply; and the difference between health needs and the need for health-care. Secondly, the wider determinants of health are introduced and their relation to health needs discussed. Finally, the steps involved in a systematic assessment of the health needs of a defined population are explained, including tools and resources used to achieve this. Practical challenges are considered.

This chapter begins by applying the theory of the firm to the context of a medical practice. The concepts of profit maximization, inputs to production, and outputs from production are all applied to this example. Then the chapter moves on to discuss sources of efficiency in production and specific applications to medical care production. The chapter then develops the basics of supply curves, and how they are interpreted and used, and then brings supply together with demand to describe the basics of equilibrium in an efficient market. The last part of the chapter discusses threats to efficiency in markets, giving a brief overview of the largest sources of difficulty in applying efficient markets to the healthcare context. This sets up the rest of the book: the healthcare sector is filled with problems that make efficient markets unlikely, meaning that understanding the underlying economics is vital.

To explain countries’ varying participation in the Belt and Road Initiative, this chapter begins with a discussion of recipient country characteristics that impact the demand for Chinese spending, including the political regime, clientelism, and the public-private orientation of the corporate sector. It then discusses the supply-side factors that influence Chinese foreign spending, including the Chinese Communist Party (CCP), state-owned entities (e.g., SOEs), and private firms. Finally, it evaluates the compatibility of these demand and supply characteristics. The key prediction is that electoral autocracies will display the strongest compatibility with Chinese foreign construction spending. This is amplified when the leaders of these regimes have a weak or insecure hold on power. Electoral autocracies are also predicted to be the most avid adopters of Chinese standards stemming from their eagerness for Chinese infrastructure spending.

Chapter 3 turns to the determinants of the supply of goods and services and to the way in which the “forces” of demand and supply determine prices and the quantities exchanged. Via the use of simple models, economists explain generalizations concerning how the quantities of goods and services supplied respond to prices. The accounts of demand in chapter 2 and supply in this chapter take prices as given, and additional modeling is needed to explain how supply and demand are equilibrated and what properties market equilibria possess. This chapter pulls together the discussions of the first three chapters to offer a general sketch of the causal structure and basic principles of mainstream economics. It takes issue with the view, which used to be dominant, that general equilibrium theory is the fundamental theory of contemporary economics. What I call “equilibrium theory,” not general equilibrium theory, is fundamental.

Scientific communities act a lot like marketplaces. There are surges and falls in demand for knowledge, movement of talented individuals in and out of the space, and fierce competition for resources. The consequence of this is that the research marketplace ends up shaping scientific progress, not only because the market controls which ideas are accepted and rejected, but equally importantly by controlling who gets to participate in the running of the marketplace. This chapter is concerned with how supply and demand works in the world of research, and how people enter the scientific marketplace. Additionally, the chapter investigates how early career setbacks, contrary to expectations, can result in better researchers down the line. The final part of the chapter is concerned with how we can improve the conditions for researchers in order to retain scientific talent.

Chapter 3 establishes orphanage tourism as a demand driver for orphanage trafficking. Orphanage tourism has increased in popularity in the last decade which, in combination with an enabling environment, has led to a proliferation of orphanages being established in developing states and the emergence of orphanage trafficking. The chapter examines the interrelationship between supply and demand in orphanage trafficking and argues that in order to understand how orphanage trafficking functions, a reconceptualisation of demand is required. Demand in trafficking is generally regarded as the embodiment of consumer desire, which may be illegal or at other times morally challenging. However, demand for orphanage tourism functions differently as it is not initially predicated on consumer desire, but instead on a perceived supply of orphans who require assistance. It is this perceived supply which orphanage tourism responds to. To address the demand of orphanage tourism, the perception of the supply of vulnerable orphans must be countered. Orphanage tourism needs to be addressed bilaterally as both a threat to child protection and as a demand driver for child trafficking into orphanages.

This chapter identifies and discusses the wide variety of business structures commonly found in the commercial landscape. All organisations that supply or acquire goods or services, whether for profit or not, must choose an appropriate business structure to ensure their longevity and successful operation. That choice will be influenced by a number of factors, such as the scope and nature of the organisation’s operations, its size, the risks and costs associated with its enterprises, and tax implications. The choice may even change in time as the organisation grows and its needs and challenges change. The principal forms of business structure are discussed in turn to provide a basis for understanding how each operates in practice.

Chapter 4 on Australia presents a pioneering, quantitative analysis of the summary details of consultancies and other contracts over the past three decades, as these were listed in mandatory reporting systems of the national government. Using text analysis and keyword searches, the chapter focuses on consultancies and other contracts that appeared to be oriented, or at least relevant, to policy matters and programme content, as distinct from ‘neutral’ corporate services. In contrast to a reduction in the level of in-house staffing, it reveals strong long-term growth in spending on these policy-relevant contracts across each of the three decades. It also establishes that this overall pattern of growth was replicated right across Commonwealth departments. In regard to market share on the supply side, it finds a polarized distribution in each of the three decades: a corporate end where a very small proportion of suppliers get much of the spending, and a huge array of sundry operators undertaking very small amounts of work. It argues that the long-term market share of successful consultants and contractors put them in a position to influence many aspects of programme development.