The Market Kills Its Own Heroes

 When a Life-Saving Drug Cannot Survive the Market

What should happen when a company develops a drug that society urgently needs? Most people would say that this company should succeed, as an efficient market should give high return to goods with high demand compared with its supply. However, the story of Achaogen, a biotechnology company developing a new antibiotic called Plazomicin, isn’t like this.

 

Achaogen spent 15 years and hundreds of millions of dollars to develop Plazomicin, a new antibiotic to treat superbacterial infections that can no longer be cured by previous antibiotics. But less than a year later, they went bankrupt. Their core assets were sold for only $16 million (Wells, Nguyen and Harbarth, 2024). It’s a really amazing business story. It shows how the market will fall when private incentives couldn’t match social value. So here's the question, why can’t an invaluable drug support the success of the company that developed it?

 

Plazomicin was so powerful that doctors refused to prescribe it widely, keeping it locked away as a last resort so bacteria wouldn't develop resistance to it. Completely the right medical call, but it’s completely catastrophic for business. With barely any sales and a healthcare system that didn't reward innovation, the company couldn’t survive.

 

Market Failure in the Antibiotic Industry

The collapse of Achaogen is a market failure rather than a business failure. To understand why Plazomicin couldn't survive in the market, we must look at marginal private benefit (MPB) and marginal social benefit (MSB) of consuming Plazomicin.

Figure 1: Negative Externality

 

Take a look at Figure 1. In reality, the cost of producing additional medicine is constant and that’s our horizontal marginal private cost (MPC) line. The marginal social cost (MSC) and supply (S) curves are identical to MPC. Imagine that producing Plazomicin doesn’t generate negative effects on the environment and society. However, consuming more Plazomicin would lead to a significant and increasing marginal external cost (MEC_C), as antimicrobial resistance is one of the top global public health threats, and the overuse of antimicrobials is the main driver in the development of drug-resistant pathogens (World Health Organisation, 2023). Also, the level of resistance is correlated with the level of antibiotic administered (Bell and Gouyon, 2003). The MPB and demand (D) curves are negatively sloped. Imagine when you’re ill and take one unit of medicine, the condition would become better obviously. However, after consuming the second unit, the effect wouldn’t be as visible as the previous one. The MSB equals MPB – MEC_C.

If the government doesn’t control using antibiotics, the equilibrium would be at point A. However, under Q₂, the society bears too much risk that this kind of antibiotics would lose its effect soon because of the overuse. Therefore, the state must use policies to limit people to use it, controlling the equilibrium from A to B and the quantity from Q₂ to Q_1.

 

Misaligned Incentives and Moral Hazard

The persistence of Q₂ is driven by the moral hazard among consumers. More antibiotics use can bring clear private benefits. Patients using more of it would recover quicker. However, there’s a wider cost, like more antimicrobial resistance, fewer effective drugs in the future and greater pressure on the health system. It’s not only attributed to some specific consumers who overuse antibiotics, but also affects the whole society.

 

That’s where the incentive problem comes in. Patients may consume antibiotics all the time until their MPB matches MPC, even though the MSC is much higher.

 

What’s more frustrating is that it’s in stark contrast to the situation in the pharmaceutical industry. Companies which develop new antibiotics face the opposite incentive problem. They need to bear huge research and development costs and face years of uncertainty. Even if it is successfully listed, the economic return may be negligible (Wells, Nguyen and Harbarth, 2024). The collapse of the Achaogen company after the launch of Plazomicin is a strong example of this broken system. Innovation comes with risks, but the market does not provide enough rewards to maintain such innovation.

 

Therefore, the antibiotic market has suffered a double blow. For companies trying to solve this problem, the market returns are often unsatisfactory. On the other hand, it underestimates the costs of action that exacerbate the problem. This kind of social cost is extremely huge. According to the Centers for Disease Control and Prevention (CDC), antimicrobial resistant infections affect more than 2.8 million people in the United States every year. Also, it causes more than 35000 deaths (CDC, 2024).

 

For that reason, antibiotic resistance should not be seen only as a medical problem. It’s also an economic problem driven by misaligned incentives.

Why Can’t the Market Correct Itself?

If the incentive mechanism is so distorted, why can't the free market solve it? Coase's theorem refers that if property rights are defined, private sectors can negotiate to get an efficient outcome.

 

However, the example of antibiotics is not suitable here. No one can easily own or trade the future effectiveness of drugs. Also, affected populations include patients, hospitals and governments in many countries, so transaction costs are huge. Therefore, the government's structural intervention is essential.

 

Curing the Market

So, how could policymakers intervene both overconsumption and underinnovation?

1. Reduce the use of antibiotics: Policymakers need to reduce unnecessary use of antibiotics. This doesn’t mean to set the price higher. Patients in need shouldn’t be excluded. A more effective method is to manage stricter. Stricter prescription rules should be utilised to ensure that strong drugs like Plazomicin are only used when truly necessary.
2. Delinking Profit from Volume: The government should decouple profit from volume to solve the dilemma. The British National Health Service (NHS) recently launched a subscription model, which requires a fixed annual fee to get new antimicrobials, no matter how many pills are actually prescribed (National Institute of Health and Nursing Excellence, 2019). This cuts off the link between profit and sales, thus rewarding those companies that develop drugs.

In conclusion, the collapse of Achaogen is not just a story of a failed company. It also reminds us how important it is to recognize the limitations of the market. We need Plazomicin, but we also need to use it carefully. Therefore, the usual market logic is not applicable. Without strict policy intervention to protect innovations, the tragedy of Achaogen may occur frequently, and the society will continue to lose valuable medicines.

References

Bell, G & Gouyon, P.H. (2003). ‘Arming the enemy: the evolution of resistance to self-proteins’, MICROBIOLOGY SOCIETY, 149(6), pp.1367. https://doi.org/10.1099/mic.0.26265-0. (Accessed: 7 April 2026).

 

Centers for Disease Control and Prevention (CDC) (2024). Antimicrobial Resistance Facts and Stats. Available at: https://www.cdc.gov/antimicrobial-resistance/data-research/facts-stats/index.html. (Accessed: 7 April 2026).

 

National Institute for Health and Care Excellence (NICE) (2019). A new model for evaluating and purchasing antimicrobials in the UK. Available at: https://www.nice.org.uk/what-nice-does/life-sciences-how-to-get-your-product-to-market/a-new-model-for-evaluating-and-purchasing-antimicrobials-in-the-uk.(Accessed: 7 April 2026).

 

Wells, N., Nguyen, V.K. and Harbarth, S. (2024). Novel insights from financial analysis of the failure to commercialise plazomicin: Implications for the antibiotic investment ecosystem. Humanities and Social Sciences Communications, 11, 941 (2024). Doi: https://doi.org/10.1057/s41599-024-03452-0. (Accessed: 4 April 2026).

 

World Health Organisation (2023). Antimicrobial resistance. Available at: https://www.who.int/news-room/fact-sheets/detail/antimicrobial-resistance. (Accessed: 18 March 2026).

Buy Now, Pay Later: The Hidden Cost of Splitting Reality

 

Figure 1: Buy Now, Pay Later (BNPL) concept

 

 

It’s 11:47 pm. You’re scrolling through an online store and spot a jacket for £200. It feels a bit expensive. Then you see the option to pay £50 today and split the rest over four months. Suddenly, it feels affordable and you click “buy.” Nothing about the price has changed, but the way it’s presented makes it easier to justify. Instead of thinking about the full £200, you focus on the £50 in front of you.

Figure 2 shows how this plays out over time. The dotted line represents what consumers feel they are paying, low at first, then rising. The solid line symbolises real cost: flat and unchanged from day one.The gap between them is where financial trouble starts.

Figure 2: Perceived vs Actual Cost over time under BNPL

 

The problem? This changes how we see cost and risk, leading to both individual debt and market failure.

In the UK, around 27% of adults have used Buy Now, Pay Later (BNPL) in the past year (Poll and Byrne, 2021, p.6). This shows how normalised this form of borrowing has become. BNPL works by shifting attention away from the total cost and towards the first instalment. This reflects present bias, where individuals place more weight on immediate payments than future ones. The £50 feels manageable, while the remaining payments are treated as less important. This can be explained by hyperbolic discounting (Laibson, 1997), where future costs are heavily discounted, leading consumers to judge affordability based only on the present.

In reality, this creates a gap between perceived affordability and actual financial commitment. Many users underestimate the risks, with 42% reporting that they did not fully understand what they were signing up for, and 2 in 5 users having used BNPL without even realising it (Poll and Byrne, 2021, p.3). As a result, payments can quickly build up. The report shows that 41% of users have struggled to make a repayment, while FCA evidence similarly highlights that many consumers do not fully understand the terms and risks of BNPL. This suggests that consumers are misjudging affordability and taking on financial obligations they cannot sustain. BNPL, therefore, does not reduce the cost of consumption; it changes how that cost is perceived, often leading to higher spending and financial strain.

The Information Gap: When 'Buy Now' Meets 'Pay Later'

This misperception is not accidental. It is rooted in a deeper economic problem: asymmetric information.

The core issue is that both sides are guessing. Unlike banks that run deep credit checks, BNPL providers approve most purchases in seconds with almost no background checks, creating an adverse selection problem. Risky borrowers are the very people attracted to BNPL services because other lenders have already said no. Meanwhile, people with excellent credit have little reason to use BNPL when their rewards credit cards offer better perks. Over time, this drives away the "good" customers and leaves BNPL platforms with borrowers who are more likely to default. This is a version of "lemons problem," described by George Akerlof in the used-car market: when buyers can't tell a good car from a bad one, the market gets flooded with bad cars, or "lemons".

At the same time, moral hazard creeps in on both sides. Consumers take more risks because a missed payment won’t immediately wreck their credit score. BNPL providers don't report most of these small loans to credit bureaus, traditional banks can't see how much BNPL debt a person is carrying. This means they can lend to someone who is already drowning in debt without other lenders knowing, and without  bearing the full cost if that borrower eventually collapses (Berg, 2025).

But the information gap isn't one-way. Many users misunderstand the penalties for missed payments or how quickly a small debt can snowball (Di Maggio et al., 2022). BNPL interfaces are designed to feel casual and low-stakes, not like a binding credit agreement. Regulators in Norway have even accused BNPL provider, klarna of hiding the true cost of borrowing (Norwegian Consumer Authority, 2022). In early 2025, Klarna's credit losses jumped 17% as more customers struggled to keep up (Chosunbiz, 2025), highlighting the risks created by information gaps and  the need for transparency.

 

Regulations and Recommendations

To address these issues, the Financial Conduct Authority (FCA) of the UK will start regulating BNPL deferred payment credit from July 15, 2026. Service providers must obtain FCA authorisation and conduct strict affordability checks to prevent irresponsible lending. At the same time, loan terms must be fully disclosed to reduce consumer misunderstandings (FCA, 2026-1).

 

Therefore, we suggest that regulators require all BNPL platforms to share users’ total debt information and present real total costs and repayment risks in a unified, clear format. This will enable platforms to assess a user’s overall indebtedness before offering new credit, and also allow consumers to understand the full financial obligation before purchasing (FCA, 2026-2).

 

These rules will bring greater transparency and fairness to the BNPL market and address market imbalances caused by information gaps.

 

 

Conclusion: Why This Matters

Present bias tricks you into focusing on the £50. Asymmetric information means BNPL doesn't know your true risk, and you don't know the true cost. Adverse selection brings risky borrowers to the front of the line. Moral hazard encourages carelessness on both sides. The lemons problem then drives good customers away.

These concepts don't exist in separate boxes. They feed into each other. A consumer with present bias takes on a BNPL plan they can't really afford. Because BNPL doesn’t run proper credit checks, they get approved anyway. Since BNPL doesn't share data with other lenders, no one sees the debt adding up. When that consumer misses a payment, their credit score stays intact, so they do it again.

The result is market failure. Resources are misallocated, debt rises, and consumers end up worse off than if BNPL had never existed. The FCA's 2026 rules and our suggested data-sharing requirement would help close the information gap. But the best protection is still the simplest. Next time you see "pay £50 today," pause and ask yourself: can I really afford £200?

References:

1.    Akerlof, G. A. (1970), The Market for 'Lemons': Quality Uncertainty and the Market Mechanism, Quarterly Journal of Economics, Vol. 84, No. 3, pp. 488-500
https://www.jstor.org/stable/1879431

2.    Berg, J. (2025), Klarna and Afterpay Keep BNPL Data From Credit Bureaus, PYMNTS.com, August 2025
https://www.pymnts.com/buy-now-pay-later/2025/klarna-afterpay-keep-bnpl-data-from-credit-bureaus/

3.    Chosunbiz (2025), Klarna's Credit Losses Jump 17% as BNPL Defaults Rise
https://biz.chosun.com/en/en-international/2026/02/20/BXF6RDDP4FB4FAZY7X25K5ZSWY/

4.    Davenport, Evans, Hurwitz & Smith, LLP (2024), Managing a Buy Now, Pay Later Loan Program, Davenport Evans

https://dehs.com/managing-a-buy-now-pay-later-loan-program/

5.    Di Maggio, M., Williams, E., & Kalda, A. (2022), Buy Now, Pay Later: Credit Supply, Consumer Demand, and Welfare, National Bureau of Economic Research (NBER) Working Paper No. 30535
https://www.nber.org/papers/w30535

6.    Financial Conduct Authority. (2026-1). Buy Now Pay Later. https://www.fca.org.uk/consumers/buy-now-pay-later

7.    Financial Conduct Authority. (2026-2). New protections confirmed for Buy Now Pay Later borrowers. https://www.fca.org.uk/news/press-releases/new-protections-confirmed-buy-now-pay-later-borrowers

8.    Laibson, D. (1997) ‘Golden Eggs and Hyperbolic Discounting’, The Quarterly Journal of Economics, 112(2), pp. 443–478. Available at: https://doi.org/10.1162/003355397555253.

9.    Norwegian Consumer Authority (2022), Klarna Criticized for Misleading Marketing and Hidden Costs
https://www.forbrukertilsynet.no/english/klarna/

10.                  Poll, H. and Byrne, G. (2021) Buy Now...Pain Later? Citizen’s Advice. Available at: https://assets.ctfassets.net/mfz4nbgura3g/1YG7ZltPP1JfBXDLfAIPgI/132a8617c04231d32eca733af7cdbcfe/BNPL_20report_20_FINAL_.pdf.

11.                  Protections to help Buy Now Pay Later borrowers navigate their financial lives (2025) FCA. Available at: https://www.fca.org.uk/news/press-releases/protections-help-buy-now-pay-later-borrowers-navigate-financial-lives. 

Is Rave Culture Everything It Is Set Out To Be?

 

Imagine a world where everyone worked together to form a collective, a world in pursuit of belonging and inclusivity, a world chasing euphoria through music and dance. This is what defines rave culture. Spread by word of mouth, misfits and music lovers overwhelmed warehouses, branching out across the underground scene with party drugs fueling the nights. Raving has since been popularised, with like-minded people gathering to witness the glory that the free party culture holds. However, behind the neon lights, there comes a cost, but to whom does this cost lie?

 

The Welfare Loss of the Afterparty

In a free market, all agents operate to benefit themselves, exchanging information on their needs, wants, and capabilities. Subsequently, the market reacts to changes in this information, resulting in fluctuations in price and quantity demanded. However, this doesn't always reflect the full cost of producing and/or consuming a service. There are hidden costs to third parties when a service is produced or consumed that economists call negative externalities. When ravers engage in the free party movement, they find joy through community; however, this forms large crowds prone to littering in local areas and damaging the environment. The accumulation of litter forms a divergence between the marginal private cost (MPC) that firms cover and the marginal social cost (MSC) that the public endures—what Arthur Pigou described as “the divergence between private and social net product”[1]  (Pigou, 2002). Thus, a market failure from a misallocation of resources unveils, which is not represented in the balance sheet, also known as a Pareto inefficiency.

Cigarette butts and packaging are found in 81% of deprived areas. Due to the unsightly litter, local economies struggle to grow and continue to decline, taking with it the morale of stakeholders (Keep Britain Tidy, 2025). Cigarette companies don't take accountability for the social costs that arise and the psychological toll they cause. They don't take full accountability for their actions; they just pay the price indicated by the market for the sole purpose of maximising profits instead of welfare.

(Keep Britain Tidy, 2025). Is this relatable? In and around all rave venues, a flurry of litter can be found; those who litter don't take responsibility for it, and the rave organisers don't cover the cost of the externality either. Consequently, it is the community that is forced to pay the price, and if left untreated, may contribute to the economic decline in deprived areas.

This process of littering happens regularly in public spaces and rave venues across the world, with one of the most famous cases being The Brighton Beach Boutique II (2002). This was a free event on Brighton Beach, which was non-excludable to the public and non-rivalrous, as there wasn’t a limit to the number of people who could enjoy this experience. With so many positives, what could go wrong?

The event was initially planned for 60,000 attendees, escalating to 250,000 people gathering to witness Fatboy Slim in one of the biggest raves of the decade (Coll, 2022). This is where the cracks began to form, with no clear ownership, and people weren’t held accountable for their actions. The market failure began to show its ugly face. There was a shared view that littering a single item has little to no impact; however, as this behaviour was repeated amongst thousands of ravers, it became a prominent societal issue known as the free-rider problem. The aftermath led to mass amounts of litter scattered across the area, with the clean-up costs imposed on the local council and community. This is a result of the tragedy of the commons, leading to a systematic failure with the under-provision of cleanliness and increased environmental degradation. People have little motivation to safeguard these areas as they belong to everyone but no one in particular (Hardin, 1968).

Correcting Market Failure in Rave Events

The Coase theorem provides an elegant solution to the negative externality associated with rave culture, arguing that when property rights are clearly defined and negotiation is possible, parties involved in an externality can reach an efficient solution without government intervention (Parisi, 2008). In this case, local councils or owners of public spaces could establish agreements with event organisers before a rave takes place. For example, organisers could be required to fund cleanup crews, provide sufficient waste bins, or pay refundable deposits that are only returned once the site is restored to its original condition. This would force organisers to bear part of the social cost created by littering, rather than leaving taxpayers or local communities to absorb the burden. In events like the 2002 Brighton Beach rave, where large amounts of rubbish were left behind, such arrangements could have reduced the damage by making organisers accountable for post-event waste management.

Although the Coase Theorem offers a practical solution for littering, it is difficult to apply to other negative externalities caused by rave culture, such as noise pollution. Due to the high density and transient nature of the crowds, negotiating the social cost becomes complex as it is impractical to identify the affected individuals and determine the extent of the impact (Schneider, 2022).

A more effective solution is a combined strategy with other policies like a Pigouvian tax, which makes those responsible pay for the external cost they create. This could involve charges on single-use items like plastic cups, encouraging organisers and attendees to reduce waste. Unlike the Coase Theorem, this approach is more practical for large events where negotiation is difficult. The revenue generated can also fund cleanup and environmental restoration, helping to offset the damage caused.

 

When Celebration Comes at a Cost

If short-term enjoyment is prioritised over its wider social costs, the consequences will fall back on society. What seems harmless—such as littering—accumulates into long-term damage to shared spaces and communities. While solutions like the Coase Theorem and Pigouvian tax offer some accountability, they are not always enough. Ultimately, balancing enjoyment with responsibility is key to preventing these hidden costs.

References

 

Coll, T. (2022). 20 years on from Fatboy Slim’s mammoth Brighton beach party. [online] Far Out Magazine. Available at: https://faroutmagazine.co.uk/fatboy-slim-beach-party-20-years-on/ [Accessed 24 Apr. 2026].

Hardin, G. (1968). The Tragedy of the Commons. Source: Science, New Series, [online] 162(3859), pp.1243–1248. Available at: https://pages.mtu.edu/~asmayer/rural_sustain/governance/Hardin%201968.pdf.

Keep Britain Tidy. (2025). A Rubbish Reality Our litter Problem and Why is Matters. [online] Available at: https://www.keepbritaintidy.org/sites/default/files/2025-11/KBT%20Rubbish%20Reality%20Report%20Jan%2025.pdf#:~:text=Smoking%2Drelated%20litter%20(cigarette%20butts,survey%20was%20carried%20out%20in [Accessed 24 Apr. 2026]

            Parisi, F. (2008). Coase theorem. The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-58802-2_251

Pigou, A.C. (2002). The Economics of Welfare. New Brunswick, N.J. ; London Transaction Publ. C.

            Schneider, N. (2022) “Internalizing Environmental Externalities and the Coase Theorem”, World Journal of Applied Economics, 8(2), pp. 93-100. doi: 10.22440/wjae.8.2.4.

 

Going Live, Staying Hidden: How Streamers Exploit the Information Gap

 

Livestreaming platforms such as Twitch, YouTube Live and Kick have grown to where creators broadcast in real time to millions of viewers worldwide. However, beneath the entertainment lies a fundamental economic problem: asymmetric information, where there is an imbalance of information across participants in an economic transaction. In this blog, we explore three branches of this issue - principal-agent problem, moral hazard and adverse selection - within the livestreaming industry.

 

In 2024, a live stream by Johnny Somali sparked fierce criticism across South Korea. While visiting the country, he kissed a statue of a "comfort woman," widely perceived as an insult to the victims of Japan's wartime atrocities (BBC, 2026). While many have condemned this act as outrageous, an uncomfortable question has emerged: why do creators engage in such actions?

 

To answer this question, you must understand one economic concept: the principal-agent problem. Platforms like YouTube and Twitch act as the principal, while content creators serve as the agent. Ideally, both parties can benefit from working together: creators produce content, and platforms provide exposure and revenue.

 

However, their incentives often conflict. Creators are rewarded for generating short-term attention. Platforms, on the other hand, prioritise long-term goals such as user trust, brand reputation, and content that appeals to advertisers. This conflict of interest creates tension. While harmful content can damage a platform's image, it can also generate high engagement in the short term. Feelings of anger lead to increased view counts, higher engagement, and ultimately, greater revenue. Therefore, his immoral strategies could be seen as economically rational from a content creator's perspective.

 

Furthermore, creators are not the only ones bearing the full cost of such behaviour. The repercussions, including public backlash, cultural harm, and damage to reputation, often fall on the community and the platform. Because creators do not face commensurate consequences, they take greater risks. As long as revenue is tied to view counts and engagement, the incentive to push the boundaries will not disappear. Why don't platforms simply put a stop to such behaviour? Whilst it is possible to impose bans or suspensions, doing so strictly risks reducing content supply and user engagement.

 

Ultimately, this highlights a fundamental contradiction in the digital economy: while platforms rely on creators for user engagement, they cannot fully control their behaviour. As long as attention remains the primary currency and the incentive structure stays unchanged, controversial content will continue to proliferate. This stems from a broader issue of asymmetric information, moral hazard, a situation that arises when one party in an economic transaction cannot observe another party's behaviour, leading to one party taking on excessive risk (Goolsbee, 2024).

 

The mechanism for this starts with revenue, which is a product of views, donations, and subscribers. In this current media climate, the most effective way to stand out in streaming is to do things outside the norm: extreme stunts, large-scale activities, or controversial content driving viewership. However, some streamers take this to the extreme.

 

Take Twitch streamer Kai Cenat, one of the platform's biggest streamers, with 19.8M followers and a peak concurrent viewership of 1M. In 2023, he did a PS5 giveaway in New York, livestreaming the event (BBC, 2023). Due to a lack of planning and coordination with the city, thousands of people rampaged through Union Square, hurling bottles, stones, and tins of paint. This caused the NYPD to declare a level four mobilisation with one thousand officers dispatched, assaulting police and resulting in sixty arrests. This suggests that Kai Cenat’s marginal private benefit was high through global viewership of this event, but his marginal private cost was moderately low, such as soft legal consequences, despite inciting a riot. The main costs were imposed on the public through property damage and injuries, the police, emergency services, and the platform. In microeconomics, this is called negative externalities, from the production of the live-streamer. As streamers do not internalise these external costs, risky behaviour exceeds the socially optimal level where marginal social cost is greater than marginal private cost.

 

After discussing the streamers, let’s turn our attention to the products they sell during their livestreams.

 

Have you ever wondered whether the products promoted by liverstreamers are genuine? They appear convincing on screen, and the discounts seem too good to resist.

 

In fact, such doubts are justified. A report by Reuters states that live-stream shopping makes it more difficult to identify counterfeit or substandard goods, as real-time video and rapid transactions limit effective verification (Reuters, 2024). This can also be attributed to asymmetric information. In the livestreaming market, sellers and streamers often know more about the products themselves than consumers do.

Consequently, consumers rely more on signals such as the streamer’s reputation to judge product quality. However, this often does not reflect the true quality of the goods. Whilst some streamers might promote high-quality products to safeguard their reputation, most streamers are typically incentivised to promote best-selling products to maximise commissions, rather than to recommend genuinely high-quality products. As a result, low-quality products can exploit the streamer’s reputation to be presented as equally trustworthy.

 

From the consumer’s perspective, products begin to appear similar in quality. When consumers are unable to distinguish product qualities, they might assign a price based on their perceived average quality. This might result in an unfair price for high-quality sellers, leading these sellers to exit the market. Thus, the average quality of remaining products declines, consumers become willing to pay even lower prices, and more high-quality sellers are driven away. This is known as adverse selection, a situation where there are stronger incentives for “bad” types of a product to be involved in a transaction than “good” types of the product (Goolsbee, 2024).

 

Overall, the livestream platform can highlight how asymmetric information can distort incentives across a wide range of areas, from creators’ behaviour to product markets. Unless these information gaps and misalignments of incentives are addressed, the market will remain inefficient, with society bearing costs that benefit only individual streamers.

References

 

Ng, K. (2026). ‘Johnny Somali: South Korea jails US YouTuber for public nuisance’, BBC News, [online] 15 Apr, Available at: https://www.bbc.co.uk/news/articles/cj400lje9vxo (Accessed: 23 Apr 2026).

 

Kim, C. (2023). ‘Kai Cenat: Twitch streamer says he's "beyond disappointed" after New York riot’, BBC News, [online] 4 August, Available at: https://www.bbc.co.uk/news/world-us-canada-66466699 (Accessed: 3 April 2026).

 

Goolsbee, A., Levitt, S. and Syverson, C. (2024). Microeconomics. 4th edn. New York: Macmillan Learning. Kortext. Available at: https://read.kortext.com/reader/pdf/948705/ (Accessed: 25 Feb 2026).

 

McLymore, A. (2024). ‘Focus: ‘Livestream’ shopping thwarts some high-tech tools to stop fake merch’, Reuters, [online] 8 May, Available at: https://www.reuters.com/technology/livestream-shopping-thwarts-some-high-tech-tools-stop-fake-merch-2024-05-07/ (Accessed: 24 April 2026).

Sold Out in Seconds: Why the Concert Ticket Market is Failing Fans

 Let me guess, you and your friends have been dying to go to the next Drake concert, but tickets have instantly sold out and are now being resold for 5 times the price. And what's worse, you can’t even tell if these tickets are real! This isn’t just bad luck. Economists would suggest two concepts that can explain this issue: asymmetric information, where sellers know more about the validity of the ticket in comparison to buyers, and the negative externality placed on genuine fans when bots buy out tickets before they even get a chance. This pressure pushes fans into irrational decisions, overpaying on sketchy resale sites out of fear of losing out.  Are we doomed to buy dodgy, expensive tickets, or is there actually something that can be done? 

 

When resale becomes a market failure (and why we keep paying anyway)

A resale market can be defended in theory. They can be seen as efficient because tickets are reallocated to those buyers who are willing to pay the most. However, once bots and fraud enter the market, that logic becomes significantly weaker. The market now reflects a form of market failure where bots create negative externalities, and fraudulent listings worsen asymmetric information. As bots artificially inflate demand, prices rise, and genuine fans who can’t afford to pay these heightened prices get pushed out entirely

Figure 1: How bots distort the concert ticket market

Source: Authors’ own 

 

As shown in Figure 1, bots impose costs on ordinary buyers who never chose to participate in that race. Some industry reporting suggests that 73% of major ticket sales were targeted by bots in 2023 and that bots can buy in 0.2 seconds compared to the 45 seconds it roughly takes a human (Doubois, 2026). This shows how automated buying creates a negative externality by pushing fans into longer queues and having a much lower chance of getting face-value tickets. But the impact of bots goes beyond just the price. 

 

Furthermore, bots buying up tickets creates a sense of urgency, which results in fans turning towards unofficial sites. The UK government says the CMA’s analysis found that typical markups on the secondary market at 50% (UK Gov, 2025). We might assume fans would simply walk away at that point, but loss aversion and FOMO mean people will still pay over the odds rather than risk missing out entirely, acting against their own rational self-interest.

 

 

Can you even trust what you are buying?

 

With the recent rise of resale opportunities in online markets, there are now more creative ways than ever to deceive buyers (bots, fraud). This can be scary, but it's important to know what market you’re realistically navigating when buying a concert ticket these days. Fake concert tickets have become increasingly common in secondary markets, and in this scenario, sellers have more information about the authenticity of their tickets than buyers do. Some sellers can be genuine in selling tickets that are real, but others take advantage of a ‘sold-out’ event of a popular singer by selling fake digital tickets to earn money (Kiger, 2023). Subsequently, buyers have no way of identifying which seller is honest, leaving them with less information about whether the ticket is real or fake. This creates uncertainty and highlights the market failure of asymmetric information between buyers and sellers (EBSCO, 2025).

 

The frenzy of buying concert tickets has caused losses of almost £1.6 million in music-related ticket fraud in the UK, with nearly 3,700 scam complaints in 2024 (Office, 2025). This is mostly caused by resales on unauthorised sites where fake tickets are essentially worthless, yet since buyers blindly trust sellers and are loss-averse, fraudsters can still sell them for a price far greater than what it's truly worth, encouraging more scams to pervade the market. 

 

 

So, what's being done to tackle this, and does any of it actually work?

 

In November 2025, the UK capped resale ticket prices, meaning you can't list a ticket on resale platforms for more than you originally paid. It's estimated to make resale tickets £37 cheaper on average, saving fans collectively £112 million per year, but the real challenge is actually enforcing it (McIntosh, 2025).

The catch? Resellers won't just disappear; they'll just move to platforms like Facebook Marketplace, where buyers have even less protection. In Ireland, where these caps already exist, fraud is nearly four times higher because caps have driven demand underground into informal markets full of scammers (Gottfried, 2025).

 

A more direct fix is digital verification. If every ticket carried a verifiable digital certificate proving its authenticity, buyers wouldn’t be crossing their fingers and holding their breath at the gate, hoping it scans (Ticket Fairy, 2026). Even if bots manage to rapidly buy tickets, a verified certificate tied to a legitimate purchase makes it far harder to bulk buy and resell fraudulently, cutting off the bot resale pipeline. This closes the information gap between buyers and sellers that makes fraud so easy in the first place, as the certificate acts as a price signal to buyers that the ticket is genuinely worth what they are paying. Therefore, resale is not stopped entirely; it just makes passing off a fake significantly harder. 

 

People always suggest a boycott, but let's be real: if your favourite artist announces a tour, are you actually going to stop searching for tickets? Most of us won't, and that's exactly why the problem persists.

No single fix will solve everything, but combining smarter legislation with enhanced technology is the best way to ensure a fairer deal for music fans.

 

 

It would be wrong to say ticket resale markets are inherently broken. They do end up providing tickets to people who really want them. But bots and fake tickets have ruined it for everyone. Asymmetric information has broken trust, irrational decision-making driven by FOMO has pushed fans into overpaying, and bots produce a negative externality with the rest of us, real Drake fans stuck at the back of the queue. Policy alone can’t fix this. As Ireland shows, price caps can actually make things worse by pushing resale into even less regulated spaces. The only real solution comes from closing the information gap through digital verification and smarter platform regulation. This way, we can all actually get to that next Drake concert, with no stress and our wallets intact. 

References:

 

Doubois, N. (2026). Concert Ticketing Industry Statistics: Market Data Report 2026. [online] Worldmetrics.org. Available at: https://worldmetrics.org/concert-ticketing-industry-statistics/ [Accessed 17 Apr. 2026].

‌EBSCO. (2025). Information asymmetry | Social Sciences and Humanities | Research Starters | EBSCO Research. [online] Available at: https://www.ebsco.com/research-starters/social-sciences-and-humanities/information-asymmetry [Accessed 10 Apr. 2026].

Gottfried, G. (2025). UK’s Ban On For-Profit Ticket Resale Official, Reactions - Pollstar News. [online] Pollstar News. Available at: https://news.pollstar.com/2025/11/19/uk-makes-plans-to-ban-for-profit-ticket-resale-official-reactions/ [Accessed 13 Apr. 2026].

Kiger, P.J. (2023). Buying Sports or Concert Tickets? Here’s How to Avoid Scams. [online] AARP. Available at: https://www.aarp.org/money/scams-fraud/avoid-fake-sports-concert-tickets/ [Accessed 18 Apr. 2026].

Madders, J. (2025). Putting fans first A consultation on the resale of live events tickets. [online] Available at: https://assets.publishing.service.gov.uk/media/677ff33422a085c5ff5c0546/putting-fans-first-consultation-on-the-resale-of-live-events-tickets.pdf? [Accessed 18 Apr. 2026].

McIntosh, S. (2025). What Are the Planned New Ticketing Laws, and How Much Could They Save fans? BBC News. [online] 18 Nov. Available at: https://www.bbc.co.uk/news/articles/cj6nlr4wj09o [Accessed 13 Apr. 2026].

Office, H. (2025). £1.6m lost to gig ticket scams as public urged to take caution. [online] GOV.UK. Available at: https://www.gov.uk/government/news/16m-lost-to-gig-ticket-scams-as-public-urged-to-take-caution [Accessed 10 Apr. 2026].

Ticket Fairy (2026). Ticket Fairy Promoter Blog. [online] Ticket Fairy Promoter Blog. Available at: https://www.ticketfairy.com/blog/fan-to-fan-ticket-resale-in-2026-tech-strategies-for-a-fair-secure-secondary-market [Accessed 14 Apr. 2026].

The Billion-Dollar Lag: Why Ozempic's Successor Is Stuck in the Lab. A Microeconomic Look at Externalities, Incentives and Market Failure

 

Chances are, you've scrolled past at least one dramatic celebrity weight-loss story on social media recently. From stars like Oprah to Megan Trainer, everyone's favorite celebrity has seemingly attained their dream bodies overnight. These transformations didn't happen in the gym, but through the wonder drug: Ozempic. Ozempic, the weight-loss drug that has taken the world by storm, is the most well known product in a broader class of drugs known as GLP-1s.

Source: Daily Mail, 2024

 

GLP-1s work by making you fuller longer and curbing your appetite– simple in theory, transformative in practice. For patients, this means weight loss and significantly lower risk of heart attacks and strokes. But the benefits don't stop at the individual. A healthier population means less pressure on the NHS, which currently spends a staggering £98 billion a year dealing with obesity-related illness and lost productivity (Campbell, 2023). Employers benefit too as fewer sick days means more productive workers.

 

So far, so miraculous. But here's the uncomfortable truth: the very company behind Ozempic has no incentive to make it better, cheaper or more accessible. Novo Nordisk, the Danish pharmaceutical giant behind Ozempic, is sitting on one of the most profitable drugs in history. With demand already outstripping supply, why pour billions into researching the next generation of GLP-1s?

 

From a business perspective, the answer is simple: don't bother. The problem isn't greed, it's logic. The benefits of next-generation GLP-1 research, what economists call positive externalities, would flow to patients, the NHS and taxpayers, but Novo Nordisk would foot the entire bill. That's not a gamble any boardroom would take. And so the research stalls, and society pays the price. This is the “billion-dollar lag”.

When Profit and Progress Don't Mix

Source: Indiana University, 2023

 

Imagine you are on the board of directors of Novo Nordisk. Your current drug is a global phenomenon, demand is outstripping supply and the profits are rolling in. Now someone proposes funding the next generation of GLP-1 research, do you say yes?

 

Probably not. The odds of a new drug making it to the market are just ~15% (Schuhmacher, 2025). Furthermore, your patents could expire before the drug is even approved, meaning competitors can copy and sell it freely, leaving you with but a small portion of the returns on your own research. On top of that, even if your drug succeeds, much of the benefit flows to the patient, NHS and taxpayers rather than Novo Nordisk’s own balance sheet. In a gamble like this, you'd pocket the difference too.

This is what economists call the principal-agent problem. Society needs firms to take on research but cannot offer them enough of the reward to make it worthwhile. The result is a level of innovation far below what society actually needs– a market failure, plain and simple.

 

Why the Obvious Fix Isn't So Obvious

So what should governments do? The fix seems obvious. If companies won't take the research risk voluntarily, governments should make it worth their while. The two main tools governments can use to accomplish this are patents, which grant companies a temporary monopoly on a new drug, and direct research subsidies which offset the cost of research upfront.

 

Both options sound reasonable on paper, but they are not free. Patents are paid for by society through higher drug prices during the protected period, while subsidies draw directly from taxpayer funding. This means getting the balance right is not just a technical challenge but a question of how much society is willing to pay for innovation it may never fully control.

 

In a perfect world, governments could calibrate this precisely. Patents would last just long enough to reward innovation without blocking out competition. Subsidies too would cover exactly the risk needed to make research worthwhile- no more, no less. Companies would invest at the pace society needs and everyone would be better off. If only it were that simple…

Source: Authors' own

 

The reality is that pharmaceutical companies know far more about their actual research costs than any government does, that information gap, also known as information asymmetry, is where things unravel. Armed with that knowledge advantage, firms can lobby for subsidies well beyond what is genuinely needed, or push to extend patents far longer than is socially justified. This is why recent court battles over patent expiry such as Novo Nordisk's current case in Brazil, China and Canada are not one-off occurrences (IP fray 2026, Health Tech World 2025). Rather, they are what happens when the referee writes the rulebook.

 

Who Will Push Innovation Forward?

So where does this leave us? The “billion-dollar lag” is not simply a story of slow science or missing technology. It is a story of misaligned incentives. When existing drugs already generate billions in profit, further research looks like an expensive gamble rather than an urgent priority. And because the benefits of that research spill over to patients, the NHS and taxpayers rather than back to the firm, the market will never fix this on its own.

 

But it doesn't have to stay this way. When governments design intervention around the incentive problem rather than simply throwing money at it, the results can be remarkable. Operation Warp Speed, the US government's COVID-19 vaccine programme, promised to buy the vaccines before they even existed, removing the commercial risk that normally paralyses pharmaceutical drug research. The result was multiple approved vaccines in under a year (Gollom, 2020).

 

Applied to GLP-1 research, the same model could promise a market for next-generation drugs before they even exist, giving firms like Novo Nordisk a reason to take the gamble. The blueprint exists. The only question is whether governments will act before the next crisis forces their hand.

Reference List:

Campbell, D. (2023). Cost of people being overweight in UK now £98bn, study finds. The Guardian. [online] 4 Dec. Available at: https://www.theguardian.com/society/2023/dec/04/cost-of-people-being-overweight-in-uk-now-98bn-study-finds (Accessed: 23 April 2026).

Daily Mail (2024) 'Oprah Winfrey admits she DID use weight loss medication', Daily Mail, 13 January. Available at: https://www.dailymail.com/tvshowbiz/article-12860333/Oprah-Winfrey-admits-DID-use-weight-loss-medication.html (Accessed: 23 April 2026).

Gollom, M. (2020). Why Trump’s Operation Warp Speed is credited with helping race for COVID-19 vaccine. [online] CBC. Available at: https://www.cbc.ca/news/health/operation-warp-speed-trump-pfizer-moderna-vaccine-1.5806820 (Accessed: 23 April 2026).

Health Tech World (2025) ‘A key Ozempic patent lapses in Canada: Deliberate or a mistake?’, Health Tech World, 22 September. Available at: https://www.htworld.co.uk/news/a-key-ozepmic-patent-lapses-in-canada-deliberate-or-a-mistake-rg25/ (Accessed: 23 April 2026).

Indiana University (2023) 'Behind the Ozempic headlines', My IU, Available at: https://www.myiu.org/stories/behind-the-ozempic-headlines.html (Accessed: 23 April 2026).

IP fray (2026) ‘China’s top court grants Novo Nordisk win over key Ozempic patent’, ip fray, 5 January. Available at: https://ipfray.com/chinas-top-court-grants-novo-nordisk-win-over-key-ozempic-patent/ (Accessed: 23 April 2026).

Schuhmacher, A., Hinder, M., Brief, E., Gassmann, O. and Hartl, D. (2025) ‘Benchmarking R&D success rates of leading pharmaceutical companies: an empirical analysis of FDA approvals (2006–2022)’, Drug Discovery Today, 30(2), 104291. Available at: https://doi.org/10.1016/j.drudis.2025.104291 (Accessed: 23 April 2026).