On Luxury and Equilibrium

Andrea Mantovi ()

Review of Economic Analysis, 2014, vol. 6, issue 2, 87-118

Abstract: Building on a class of transcendental preferences for luxury, explicit solutions for price taking behavior and exchange equilibrium are discussed, which share the analytical tractability of Cobb-Douglas models. Such economies display fundamental positive properties, among which uniqueness and price tâtonnement stability of equilibrium. The monotone comparative statics of the luxury effect is discussed. Pareto sets admit a simple characterization, which generalizes the one set forth by Afriat (1987) so that a richer phenomenology is embraced. Potential lines of progress are envisaged.

Keywords: Edgeworth Box; General Equilibrium, Luxury, Necessity, Monotone Comparative Statics, Pareto Set (search for similar items in EconPapers)
JEL-codes: D50 D51 D58 (search for similar items in EconPapers)
Date: 2014
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