The transfer paradox in welfare space

Thomas Demuynck, Bram De Rock and Victor Ginsburgh

Journal of Mathematical Economics, 2016, vol. 62, issue C, 1-4

Abstract: The transfer paradox describes a situation in which a transfer of endowments between two agents results in a welfare decrease for the recipient and a welfare increase for the donor. It is known that in a two-agent regular exchange economy with an arbitrary number of goods, the transfer paradox occurs only if the price equilibrium is unstable. In this paper, we show that in the space of welfare weights, the set of stable equilibria and the set of no-transfer paradox equilibria coincide. As a corollary we also obtain that for two agents and an arbitrary number of goods, the index of an equilibrium in price space coincides with its index in welfare space.

Keywords: Welfare equilibrium; Exchange economy; Transfer paradox (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (3)

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Related works:
Working Paper: The transfer paradox in welfare space (2016)
Working Paper: The transfer paradox in welfare space (2016)
Working Paper: The transfer paradox in welfare space (2015)
Working Paper: The Transfer Paradox in Welfare Space (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:mateco:v:62:y:2016:i:c:p:1-4

DOI: 10.1016/j.jmateco.2015.10.006

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